For the demand values and the January forecast shown in the table below the exponential smoothing forecast for March using α = 0.40 is

A)1200.
B)1220.
C)1222.
D)1225.

Question

For the demand values and the January forecast shown in the table below the exponential smoothing forecast for March using α = 0.40 is

A)1200. 
B)1220. 
C)1222. 
D)1225.

Quizplus · Accepted Answer

The exponential smoothing forecast formula is:
Forecast for next period = Last period's forecast + α (Last period's actual demand - Last period's forecast)

Using the January forecast as last period's forecast and the actual demand for January in the formula, we get:

Forecast for February = 1200 + 0.4(1300 - 1200) = 1240

Using the February forecast as last period's forecast and the actual demand for February in the formula, we get:

Forecast for March = 1240 + 0.4(1500 - 1240) = 1222

Therefore, the exponential smoothing forecast for March using α = 0.40 is 1222, which corresponds to choice C.

For the Demand Values and the January Forecast Shown in the Table