What is this year's forecast using exponential smoothing with alpha = .4, if last year's smoothed forecast was 2600?
A)2,600
B)2,760
C)2,800
D)3,840
E)3,000

Question

Quizplus · Accepted Answer

Using exponential smoothing with an alpha of 0.4, the forecast for this year can be calculated as:
forecast = alpha * actual value + (1 - alpha) * last year's forecast
Assuming the actual value for last year was also 2600, then this year's forecast would be:
forecast = 0.4 * 2600 + 0.6 * 2600 = 2760

Therefore, the best choice is B.

What Is This Year's Forecast Using Exponential Smoothing with Alpha