Mr.Geppetto uses exponential smoothing to predict revenue in his wood carving business.He uses a weight of $\omega$ = .4 for the naïve forecast and (1-$\omega$)= .6 for the past forecast.What revenue did he predict for March using the data below? Select closet answer.

A)106.2
B)104.7
C)103.2
D)102.1
E)101.7

Question

Mr.Geppetto uses exponential smoothing to predict revenue in his wood carving business.He uses a weight of $\omega$ = .4 for the naïve forecast and (1-$\omega$)= .6 for the past forecast.What revenue did he predict for March using the data below? Select closet answer.

A)106.2 
B)104.7 
C)103.2 
D)102.1 
E)101.7

Quizplus · Accepted Answer

The correct answer is A. 106.2. Exponential smoothing is a forecasting technique that uses a weighted average of past values to predict future values. The weight of the most recent value is typically higher than the weight of older values. In this case, the weight of the most recent value is 0.4, and the weight of the past forecast is 0.6.To calculate the forecast for March, we use the following formula:Forecast = (0.4 * Actual Revenue) + (0.6 * Past Forecast)The actual revenue for February is 110. The past forecast for March is not given, but we can calculate it using the same formula:Past Forecast = (0.4 * Actual Revenue) + (0.6 * Past Forecast)The actual revenue for January is 115. The past forecast for February is not given, but we can calculate it using the same formula:Past Forecast = (0.4 * Actual Revenue) + (0.6 * Past Forecast)The actual revenue for December is 90. The past forecast for January is not given, but we can calculate it using the same formula:Past Forecast = (0.4 * Actual Revenue) + (0.6 * Past Forecast)The actual revenue for November is 100. The past forecast for December is not given, but we can calculate it using the same formula:Past Forecast = (0.4 * Actual Revenue) + (0.6 * Past Forecast)Now we can calculate the past forecast for March:Past Forecast = (0.4 * 110) + (0.6 * 104.7) = 106.2Finally, we can calculate the forecast for March:Forecast = (0.4 * 110) + (0.6 * 106.2) = 106.2

MrGeppetto Uses Exponential Smoothing to Predict Revenue in His Wood ω\omegaω

MrGeppetto Uses Exponential Smoothing to Predict Revenue in His Wood $\omega$