A company wants to generate a forecast for unit demand for year 2020 using exponential smoothing. The actual demand in year 2019 was 120. The forecast demand in year 2019 was 110. Using these data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2020 forecast value?
A) 100
B) 110
C) 111
D) 114
E) 120

Question

Quizplus · Accepted Answer

The forecast for year 2020 using exponential smoothing is calculated as: Forecast for 2020 = Forecast for 2019 + alpha * (Actual demand in 2019 - Forecast for 2019). Plugging in the values: 110 + 0.1 * (120 - 110) = 110 + 0.1 * 10 = 110 + 1 = 111.

A Company Wants to Generate a Forecast for Unit Demand