Sales at Electronics Inc for the period January to June was

Sales at Electronics Inc. for the period January to June was listed below: Month Sales ((in $ thousand) February 68.5 March 64.8 April 71.7 May 71.3 une 72.8 anua 70 Using Exponential Smoothing with Trend Adjustment, forecast the Electronics Inc\'s July sales. Assume that the initial forecast average for January is $65,000 and the initial trend adjustment is O. Given -.1 and -2.

Solution

Trend adjusted exponential smoothing or Holt’s double smoothing

Unadjusted Forecast for the period,

Ft =. Dt-1 + (1-)Ft-1                     

Trend for the period

Tt= b(Ft - Ft-1) + (1-b)Tt-1               

Adjusted Forecast for the period=Unadjusted forecast + trend

                                 

Ft            forecast including trend for current period    

Ft-1         forecast including trend for previous period  

Tt            trend for current period    

Tt-1        trend for previous period  

Dt-1        Actual value for previous period     

               

           

0.1

b

0.2

Month

Actual Sales in thousand ($)

Unadjusted forecast

Trend

Adjusted forecast

Dt

Jan

70

0.00

65.00

Feb

68.5

65.50

0.10

65.60

Mar

64.8

65.89

0.14

66.03

Apr

71.7

65.91

0.09

65.99

May

71.3

66.56

0.18

66.74

Jun

72.8

67.20

0.24

67.44

Jul

67.97

0.30

68.27

               

Example

For February,

Unadjusted forecast for February= 0.1 * 70 + (1-0.1) *65 = 65.50

Trend for February= 0.2 (65.50- 65) + (1-0.2) *0 = 0.10

Adjusted forecast for February = 65.50 + 0.10 = 65.60

                                                               

		0.1
	b	0.2
Month	Actual Sales in thousand ($)	Unadjusted forecast	Trend	Adjusted forecast
	Dt
Jan	70		0.00	65.00
Feb	68.5	65.50	0.10	65.60
Mar	64.8	65.89	0.14	66.03
Apr	71.7	65.91	0.09	65.99
May	71.3	66.56	0.18	66.74
Jun	72.8	67.20	0.24	67.44
Jul		67.97	0.30	68.27