A Chinese dealer uses exponential smoothing with trend to fo

A Chinese dealer uses exponential smoothing with trend to forecast monthly sales of its Buick Enclaves. At the end of July the dealer wishes to forecast sales for August. The trend through July has been 15 additional Enclave sold per month. Average sales (forecast for July) have been 57 Enclaves per month. The demand for July was 62 Enclaves. The dealer uses -0.20 and = 0.10. Make a forecast including trend for the month of August. O 14.8 O 70 72 O 84.8

Solution

Forecast for August (AFt) = exponentially smoothed forecast (Ft) + exponentially smoothed trend (Tt)

Ft = Last period\'s forecast+alpha*(last period\'s actual - last period\'s forecast)

= 57+0.20*(62-57)

= 58.

Tt = beta*(Ft - Ft-1)+(1-beta)*Tt-1

= 0.10*(58-57)+(1-0.10)*15

= 0.10+13.50

=13.60

Thus forecast for August = 58+13.6

= 71.60