Final answer:
The demand forecast for a future time period in exponential smoothing is calculated by adjusting the previous forecast based on the error observed in the actual demand for the current period, multiplied by the smoothing constant α.
Step-by-step explanation:
Using exponential smoothing, the demand forecast for time period 10 equals the demand forecast for time period 9 plus α times the error in the demand forecast for time period 9. This error is calculated as the actual observed demand for time period 9 minus the forecasted demand for the same period. The exponential smoothing formula can be represented as:
Forecastt+1 = Forecastt + α(Actualt - Forecastt),
where:
- Forecastt+1 is the forecast for the next time period,
- Forecastt is the forecast for the current time period,
- Actualt is the actual demand for the current time period,
- α is the smoothing constant (between 0 and 1).