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) 100
B) 110
C) 111
D) 114
E) 120

Question

Quizplus · Accepted Answer

The exponential smoothing formula is: Forecast_new = Forecast_old + α * (Actual_old - Forecast_old). Using the given data: Forecast_2018 = 110 + 0.1 * (120 - 110) = 110 + 1 = 111.

A Company Wants to Generate a Forecast for Unit Demand