A store has the following demand figures for the last four years: Year Demand 1 100 2 150 3 98 4 112 What is the exponential smoothing forecast for year 5? Use alpha = 0

Accounting Dec 16, 2020

A store has the following demand figures for the last four years:
Year Demand 1 100 2 150 3 98 4 112
What is the exponential smoothing forecast for year 5? Use alpha = 0.3 and a forecast for year 2 of 100.

Expert Solution

Computation of Exponential smoothing forecast for Year 5:

F(3) = 0.3*Actual(2) + (1-0.3)*F(2)

= 0.3*150 + 0.7*100

= 115

F(4) = 0.3*98 + 0.7*115

= 109.9

F(5) = 0.3*112 + 0.7*109.9

= 110.53

So, Exponential smoothing forecast for Year 5 is 110.53

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