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 5 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 5 is:

Quizplus · Accepted Answer

To use exponential smoothing with alpha = 0.6, we start with F1 = 150 and use the following formula:
Ft = α(At-1) + (1-α)Ft-1
where Ft is the forecast for month t and At is the actual sales for month t. 
Using this formula, we can calculate the forecasts for months 2-5 as follows:

Month	Actual sales (At)	Forecast (Ft)
1	200	150 (given)
2	180	154
3	210	162
4	190	164.8
5	?	167.52

Therefore, the forecast for month 5 is greater than 160 but fewer than or equal to 170 units, making choice C the best option.

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