Question

Vera PLC uses exponential smoothing with trend to forecast monthly sales. At the end of September, Small Industries PLC hopes to forecast sales for October. The trend through August has been 500 additional unit sales per month (Tt-1). Average sales have been 1800 units per month (St-1). The demand for September was 1780 units (AL). Vera PLC uses alpha (a) - 0.2 and Beta (B)-0.3. Note: This Forecasting Question relates to Questions 65-67. Following the first stage of the trend-adjusted exponential smoothing method, smooth the level of the series and calculate St for Vera PLC. (retain your answer and calculation for:________

a) 1985
b) 2563
c) 2196
d) 2144
e) 2373

Answer 1

Option c (2196) is the right solution.

Step-by-step explanation:

Given:

`\alpha = 0.2`

`\beta=0.3`

`A_t=1780`

By using the formula, we get

⇒
`S_t=\alpha* A_t+(1-\alpha)* (S_(t-1)+T_(t-1))`

By substituting the values, we get

`=0.2* 1780 + (1 - 0.2)* (1800+500)`

`=356+0.8* 2300`

`=356+1840`

`=2196`