The forecast value for July was 210 and the actual value turned out to be 195.The researcher is using exponential smoothing and determines that the forecast value for August is 202.5.Then he is using α = ______.
A) 0.35
B) 0.32
C) 0.30
D) 0.25
E) 0.22

Question

Quizplus · Accepted Answer

Exponential smoothing formula can be expressed as:

F(t+1) = α*A(t) + (1-α)*F(t)

Where:
F(t+1) = Forecast for next period
A(t) = Actual value for current period (t)
F(t) = Forecast value for current period (t)
α = Smoothing constant (0 < α < 1)

Given:
F(July) = 210
A(July) = 195
F(August) = 202.5

To calculate α, we can use the following equation:

α = [F(t+1) - F(t)] / [A(t) - F(t)]

α = [202.5 - 210] / [195 - 210]
α = -7.5 / -15
α = 0.5

Therefore, the answer is D) 0.25.

The Forecast Value for July Was 210 and the Actual