Question

You are using exponential smoothing to obtain monthly forecasts of the sales of a certain product. The forecast for last month was 2,083, and then the actual sales turned out to be 1,973. Obtain the forecast for next month for each of the following values of the smoothing constant: α = 0.1, 0.3, 0.5.

Answer 1

Exponential smoothing is a forecasting method used to predict future data points based on past data. The forecast for next month can be calculated using the formula and different values of the smoothing constant α. For α = 0.1, the forecast is 2072. For α = 0.3, the forecast is 2047.6. For α = 0.5, the forecast is 2028.

Step-by-step explanation:

Exponential smoothing is a forecasting method that uses past data to make predictions about future data points. It is commonly used in sales forecasting. The formula for exponential smoothing is:

Forecast for next month = α * Actual sales for current month + (1 - α) * Forecast for current month

• For α = 0.1:

1. Forecast for next month = 0.1 * 1973 + (1 - 0.1) * 2083 = 197.3 + 1874.7 = 2072

For α = 0.3:

1. Forecast for next month = 0.3 * 1973 + (1 - 0.3) * 2083 = 591.9 + 1455.7 = 2047.6

For α = 0.5:

1. Forecast for next month = 0.5 * 1973 + (1 - 0.5) * 2083 = 986.5 + 1041.5 = 2028