Question

Suppose that the actual demand in period 1 was 10 units and the actual demand in period 2 was 9 units. Assume that the forecast for period 1 was for 8 units. If the firm uses exponential smoothing with an alpha value of 0.3, what should be the forecast for period 3? (Round answer to two decimal places.) Your Answer:

Answer 1

The forecast for period 3 using exponential smoothing with an alpha value of 0.3 is 8.7 units.

Step-by-step explanation:

To forecast the demand for period 3 using exponential smoothing, we need to use the formula: forecast for period 3 = (1 - alpha) * (actual demand in period 2) + alpha * (forecast for period 2).

Given that the actual demand in period 2 was 9 units and the forecast for period 2 was 8 units, and alpha is 0.3, we can plug in these values into the formula to calculate the forecast for period 3: forecast for period 3 = (1 - 0.3) * 9 + 0.3 * 8 = 6.3 + 2.4 = 8.7 units.