Furniture firm has decided to use exponential smoothing to forecast the next period's sales. If the forecasted sales for this period were 7,000, the actual sales of this period were 6,000 and the optimal weight was estimated to be 0.5, what are the projected sales of the next period?
A) 6,500
B) 7,500
C) 13,500
D) 14,000

Question

Quizplus · Accepted Answer

The projected sales for the next period using exponential smoothing are calculated as: New Forecast = Old Forecast + α(Actual - Old Forecast), where α is the smoothing constant (0.5 in this case). So, the calculation is: 7,000 + 0.5(6,000 - 7,000) = 7,000 - 500 = 6,500.

Furniture Firm Has Decided to Use Exponential Smoothing to Forecast