Question

A company wants to generate a forecast for unit demand for year 2018 using exponential smoothing. The actual demand in year 2017 was 120. The forecast demand in year 2017 was 110. Using this data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2018 forecast value?

a. 110
b. 114
c. 120
d. 111
e. 100

Answer 1

d. 111

Step-by-step explanation:

Calculation to determine which of the following is the resulting year 2018 forecast value

Using this formula

2018 Forecast value = Ft= Ft - 1+ (At - 1- Ft - 1)

Let plug in the formula

2018 Forecast value = 110 + 0.1 (120 - 110)

2018 Forecast value=110+0.1(10)

2018 Forecast value=110+1

2018 Forecast value= 111

Therefore the resulting year 2018 forecast value

will be 111