Table 14.10
TOMBOW is a small manufacturer of pencils and has had the following sales record for the most recent five months: Use an exponential smoothing model to forecast sales in months 2,3,4,and 5.Let the smoothing parameter equal 0.6;select F1 = 150 to get the forecast started.
-Use the information in Table 14.10.The forecast for month 4 is:

Question

Table 14.10
TOMBOW is a small manufacturer of pencils and has had the following sales record for the most recent five months:  Use an exponential smoothing model to forecast sales in months 2,3,4,and 5.Let the smoothing parameter equal 0.6;select F1 = 150 to get the forecast started.
-Use the information in Table 14.10.The forecast for month 4 is:

Quizplus · Accepted Answer

We will use the exponential smoothing model with a smoothing parameter of 0.6 and the given initial forecast of F1 = 150.

F2 = (0.6)(Actual2) + (0.4)(F1) = (0.6)(140) + (0.4)(150) = 138

F3 = (0.6)(Actual3) + (0.4)(F2) = (0.6)(165) + (0.4)(138) = 154.8 ≈ 155

F4 = (0.6)(Actual4) + (0.4)(F3) = (0.6)(180) + (0.4)(155) = 171

F5 = (0.6)(Actual5) + (0.4)(F4) = (0.6)(210) + (0.4)(171) = 195.6 ≈ 196

Therefore, the forecast for month 4 is greater than 150 but fewer than or equal to 160 units. The best choice is C.

Table 14.10 TOMBOW Is a Small Manufacturer of Pencils and Has Had