The business analyst for Video Sales, Inc. wants to forecast this year's demand for DVD decoders based on the following historical data: $$\begin{array} { l l }
\text { Year } & \text { Demand } \
\hline \text { 5 years ago } & 900 \
\text { 4 years ago } & 700 \
\text { 3 years ago } & 600 \
\text { 2 years ago } & 500 \
\text { Last year } & 300
\end{array}$$ What is the forecast for this year using trend-adjusted (double) smoothing with alpha = .3 and beta = .2, if the forecast for last year was 310, the forecast for two years ago was 430, and the trend estimate for last year's forecast was -150?
A) 162.4
B) 180.3
C) 301.4
D) 403.2
E) 510.0

Question

The business analyst for Video Sales, Inc. wants to forecast this year's demand for DVD decoders based on the following historical data: $$\begin{array} { l l } 
\text { Year } & \text { Demand } \
\hline \text { 5 years ago } & 900 \
\text { 4 years ago } & 700 \
\text { 3 years ago } & 600 \
\text { 2 years ago } & 500 \
\text { Last year } & 300
\end{array}$$ What is the forecast for this year using trend-adjusted (double) smoothing with alpha = .3 and beta = .2, if the forecast for last year was 310, the forecast for two years ago was 430, and the trend estimate for last year's forecast was -150?
A) 162.4
B) 180.3
C) 301.4
D) 403.2
E) 510.0

Quizplus · Accepted Answer

The correct answer is A.The forecast for this year using trend-adjusted (double) smoothing with alpha = .3 and beta = .2, if the forecast for last year was 310, the forecast for two years ago was 430, and the trend estimate for last year's forecast was -150 is 162.4.The formula for trend-adjusted (double) smoothing is:```Ft+1 = (alpha * At) + ((1 - alpha) * (Ft + Tt))Tt+1 = (beta * (Ft+1 - Ft)) + ((1 - beta) * Tt)```where:* Ft is the forecast for period t* At is the actual demand for period t* Tt is the trend estimate for period t* alpha is the smoothing constant for the level* beta is the smoothing constant for the trendUsing the given data, we can calculate the forecast for this year as follows:```Ft+1 = (0.3 * 300) + ((1 - 0.3) * (310 + (-150))) = 162.4```

The Business Analyst for Video Sales, Inc What Is the Forecast for This Year Using Trend-Adjusted (Double)