The number of tons of brake assemblies received at an auto parts distribution center last month was 670

Economics Dec 12, 2020

The number of tons of brake assemblies received at an auto parts distribution center last month was 670. The forecast tonnage was 720. The company uses a simple exponential smoothing model with a smoothing constant (a) of 0.6 to develop its forecasts. What will be the company's forecast for the next month? Explain.

Expert Solution

Simple Exponential smoothing formula

S(t) = S(t-1) + $\alpha$ ( x(t) - S(t-1))

Where S(t) = t period forecast

x(t) = Actual value = 720

S(t-1) = t-1 period forecast. = 670

$\alpha$ = 0.6

Putting In formula,

S(t) = 700.

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