A concert promoter is forecasting this year's attendance for one of his concerts based on the following historical data: $$\begin{array} { l l }
\text { Year } & \text { Attendance } \
\hline \text { Four years ago } & 10,000 \
\text { Three years ago } & 12,000 \
\text { Two years ago } & 18,000 \
\text { Last Year } & 20,000
\end{array}$$ What is this year's forecast using exponential smoothing with alpha = .2, if last year's smoothed forecast was 15,000?
A) 20,000
B) 19,000
C) 17,500
D) 16,000
E) 15,000

Question

A concert promoter is forecasting this year's attendance for one of his concerts based on the following historical data: $$\begin{array} { l l } 
\text { Year } & \text { Attendance } \
\hline \text { Four years ago } & 10,000 \
\text { Three years ago } & 12,000 \
\text { Two years ago } & 18,000 \
\text { Last Year } & 20,000
\end{array}$$ What is this year's forecast using exponential smoothing with alpha = .2, if last year's smoothed forecast was 15,000?
A) 20,000
B) 19,000
C) 17,500
D) 16,000
E) 15,000

Quizplus · Accepted Answer

The formula for exponential smoothing is: $ F_t = \alpha A_{t-1} + (1-\alpha) F_{t-1} $. Using last year's actual attendance (20,000) and last year's forecast (15,000), the calculation is: $ 0.2 \times 20,000 + 0.8 \times 15,000 = 16,000 $.

A Concert Promoter Is Forecasting This Year's Attendance for One