An analyst is using exponential smoothing to forecast the da

An analyst is using exponential smoothing to forecast the daily demand for a key product. The analyst starts with a naive forecast for time period 2, then begins using exponential smoothing with a smoothing constant of 0.15. The table below shows some of the calculations. period actual forecast 1 125 2 136 125 3 144 126.65 4 157 129.25 5 181 ? What is the predicted demand for time period 5? Round your answer to two decimal places.

Solution

The predicted demand for the time

actual is 181 for 5th period and smoothing constant is 0.15

forecast demand F_T = F_T-1 +$(A_T-1 - F_T-1 )

WHERE F_T = NEW FORECAST DEMAND

  F_T-1 = PREVIOUS PERIOD FORECAST

$ = SMOOTHING CONSTANT

A_T-1 = PREVIOUS PERIOD ACTUAL DEMAND

      F_T-1 = PREVIOUS PERIOD FORECAST

based in these = 129.25+0.5(157-129.25)

= 129.75 + 27.75

= 157.50

SO THE PREDICTED DEMAND FOR PERIOD 5 IS 157.50