Using exponential smoothing, the demand forecast for time period 10 equals the demand forecast for time period 9 plus
A) α times (the demand forecast for time period 8).
B) α times (the forecast error for time period 9).
C) α times (the observed demand in time period 9).
D) α times (the forecast error for time period 8).

Question

Quizplus · Accepted Answer

Exponential smoothing updates the forecast for the next period by adding a fraction (α) of the forecast error from the current period to the current period's forecast. The forecast error is the difference between the actual demand and the forecasted demand for that period.

Using Exponential Smoothing, the Demand Forecast for Time Period 10