Question

a company has had actual unit demand for four consecutive years of 127, 122, 130, and 122. the respective forecasts using exponential smoothing were 125 for each of those four years. what value of alpha, the smoothing constant, was the firm using?

Answer 1

The question deals with calculating the smoothing constant alpha in an exponential smoothing model. Without additional information or initial forecast value, it is not possible to determine alpha from the given data.

Step-by-step explanation:

The subject of the question is exponential smoothing, which is a time series forecasting method for univariate data. We're given the actual unit demand for four consecutive years (127, 122, 130, and 122) and the respective forecasts (125 for each year). The question is to determine the value of alpha, the smoothing constant, that was used in the forecasts.

To solve for the smoothing constant alpha, we need to use the formula for exponential smoothing which is:

Ft+1 = αAt + (1 - α)Ft

Where Ft+1 is the forecast for the next period, At is the actual demand for the current period, and Ft is the forecast for the current period. However, solving for alpha in this situation is not straightforward, as we would need the initial forecast value or more information on how the forecast is updated each year. Given the data provided, it's impossible to determine alpha precisely without additional information or assumptions.