Question

Alpha Company sold 2,000 widgets yesterday. It had forecasted sales of 1,900 units. Using exponential smoothing with a smoothing constant of 0.6, what is the forecast for today's sales of widgets?

A) 2,060
B) 1,940
C) 2,040
D) 1,960

Answer 1

To calculate the forecast for today's sales of widgets using exponential smoothing, use the formula: Forecast for today = (Smoothing constant x Actual sales yesterday) + ((1 - Smoothing constant) x Forecasted sales yesterday). Substitute the given values into the formula: Actual sales yesterday = 2,000 units; Forecasted sales yesterday = 1,900 units; Smoothing constant = 0.6. The forecast for today's sales of widgets is 1,960 units.

Step-by-step explanation:

To calculate the forecast for today's sales of widgets using exponential smoothing, we use the formula:

Forecast for today = (Smoothing constant x Actual sales yesterday) + ((1 - Smoothing constant) x Forecasted sales yesterday)

Plug in the given information:

Actual sales yesterday = 2,000 units

Forecasted sales yesterday = 1,900 units

Smoothing constant = 0.6

Now substitute the values into the formula:

Forecast for today = (0.6 x 2,000) + ((1 - 0.6) x 1,900) = 1,200 + (0.4 x 1,900) = 1,200 + 760 = 1,960 units

Therefore, the forecast for today's sales of widgets is 1,960 units.