A rendering plant wishes to use the data (sales records from a few local businesses and the month of the year) to help determine their supply level for the coming months. The records shown in the table provide an excellent opportunity for you to assist them with their forecasting.
$$\begin{array} { | c | c | c | }
\hline \text { Month } & \text { Sales } & \text { Pounds } \
\hline \text { Tanuary } & 45 & 54.3 \
\hline \text { February } & 57 & 63.8 \
\hline \text { March } & 32 & 39.5 \
\hline \text { April } & 44 & 49.8 \
\hline \text { May } & 51 & 52.3 \
\hline \text { Tune } & 34 & 39.9 \
\hline
\end{array}$$
-What is the forecast for July if exponential smoothing with an alpha=.04 generated a forecast of 43.0 for June?
A) 41.25
B) 40.64
C) 43.16
D) 42.88

Question

A rendering plant wishes to use the data (sales records from a few local businesses and the month of the year) to help determine their supply level for the coming months. The records shown in the table provide an excellent opportunity for you to assist them with their forecasting.
 $$\begin{array} { | c | c | c | } 
\hline \text { Month } & \text { Sales } & \text { Pounds } \
\hline \text { Tanuary } & 45 & 54.3 \
\hline \text { February } & 57 & 63.8 \
\hline \text { March } & 32 & 39.5 \
\hline \text { April } & 44 & 49.8 \
\hline \text { May } & 51 & 52.3 \
\hline \text { Tune } & 34 & 39.9 \
\hline
\end{array}$$
-What is the forecast for July if exponential smoothing with an alpha=.04 generated a forecast of 43.0 for June?
A) 41.25
B) 40.64
C) 43.16
D) 42.88

Quizplus · Accepted Answer

Exponential smoothing forecast for the next period (July) is calculated using the formula: $$F_{t+1} = F_t + \alpha (A_t - F_t)$$ where $F_{t+1}$ is the forecast for July, $F_t$ is the forecast for June (43.0), $\alpha$ is the smoothing constant (0.04), and $A_t$ is the actual value for June (39.9). Plugging in the values: $$F_{t+1} = 43.0 + 0.04 (39.9 - 43.0) = 43.0 - 0.124 = 42.876$$ Rounded to two decimal places, the forecast for July is 42.88.

A Rendering Plant Wishes to Use the Data (Sales Records