As a consultant you have been asked to generate a unit demand forecast for a product for year 2017 using exponential smoothing.The actual demand in year 2013 was 750.The forecast demand in year 2016 was 960.Using this data and a smoothing constant alpha of 0.3,which of the following is the resulting year 2017 forecast value?
A)766
B)813
C)897
D)1,023
E)1,120

Question

Quizplus · Accepted Answer

The exponential smoothing forecast for 2017 is calculated using the formula: Forecast_2017 = Forecast_2016 + α * (Actual_2016 - Forecast_2016). Since the actual demand for 2016 is not provided, we assume the forecast for 2016 is used as a proxy. Thus, Forecast_2017 = 960 + 0.3 * (750 - 960) = 960 - 63 = 897.

As a Consultant You Have Been Asked to Generate a Unit