The following table includes the information about a monthly time series. What is the forecast for May using the exponential smoothing method with α = 0.5?
A) 21
B) 21.5
C) 19
D) 19.5

Question

The following table includes the information about a monthly time series.  What is the forecast for May using the exponential smoothing method with α = 0.5?
A) 21 
B) 21.5 
C) 19 
D) 19.5

Quizplus · Accepted Answer

Using exponential smoothing method with α = 0.5, we have:
- Forecast for March = 18
- Forecast for April = 19.5 (Smoothing factor * Actual value of April + (1 - Smoothing factor) * Forecast for March = 0.5 * 21 + 0.5 * 18 = 19.5)
- Forecast for May = 20.25 (Smoothing factor * Actual value of May + (1 - Smoothing factor) * Forecast for April = 0.5 * 22.5 + 0.5 * 19.5 = 20.25)
Therefore, the forecast for May using the exponential smoothing method with α = 0.5 is 20.25, which is closest to answer B (21.5).

The Following Table Includes the Information About a Monthly Time