Question

Actual demand for a product for the past three months was

Three months ago 390 units
Two months ago 340 units
Last month 295 units
a. Using a simple three-month moving average, make a forecast for this month. (Round your answer to the nearest whole number.)
b. If 290 units were actually demanded this month, what would your forecast be for next month, again using a 3-month moving average? (Round your answer to the nearest whole number.)
c. Using simple exponential smoothing, what would your forecast be for this month if the exponentially smoothed forecast for three months ago was 440 units and the smoothing constant was 0.20? (Round your answer to the nearest whole number.)

Answer 1

a) This month = 342

b) Next month = 308

c) This month using simple exponential smoothing = 352.

Step-by-step explanation:

a) Data and Calculations:

Month Demand 3-month Moving

Average

3 months ago 390

2 months ago 340

1 month ago 295

This month 342

b)

Month Demand 3-month Moving

Average

3 months ago 390

2 months ago 340

1 month ago 295

This month 290

Next month 308

c) Simple exponential smoothing

Forecast for three months ago = 440

Smoothing constant = 0.20

Forecast for this month = 440 * (1- 0.20) = 352

d) For the simple exponential smoothing, the most recent period's forecast is multiplied by (one minus the smoothing factor).