The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
Time Period :Demand
5 years ago :900
4 years ago : 700
3 years ago : 600
2 years ago :500
Last year :300
-What is the forecast for this year using exponential smoothing with $\alpha$ = 0 4,if the forecast for two years ago was 750?
A)163
B)180
C)300
D)467
E)510

Question

The business analyst for Ace Business Machines,Inc.wants to forecast this year's demand for manual typewriters based on the following historical data:
Time Period :Demand
5 years ago :900
4 years ago : 700
3 years ago : 600
2 years ago :500
Last year :300
-What is the forecast for this year using exponential smoothing with $\alpha$ = 0 4,if the forecast for two years ago was 750?
A)163 
B)180 
C)300 
D)467 
E)510

Quizplus · Accepted Answer

We can use the formula for exponential smoothing to find the forecast:

Ft = α(Dt-1) + (1-α)Ft-1

where:
Ft = forecast for this year
α = smoothing coefficient (given as 0.4)
Dt-1 = demand from the previous year
Ft-1 = forecast from the previous year

Plugging in the given values, we get:

Ft = 0.4(300) + 0.6(750)
Ft = 120 + 450
Ft = 570

Therefore, the forecast for this year using exponential smoothing is 570, which corresponds to choice E.

The Business Analyst for Ace Business Machines,Inc α\alphaα = 0 4,if the Forecast for Two Years Ago Was

The Business Analyst for Ace Business Machines,Inc $\alpha$ = 0 4,if the Forecast for Two Years Ago Was