A store has the following demand figures for the last four years: Year Demand 2 3 4 100 150 98 112 What is the exponential smoothing forecast for year 5? Use alpha 0.3 and a forecast for year 2 of 100. 108.4 103.6 110.5
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Expert Answer
Using the exponential smoothing method the formula to calculate the forecast is as follows :
Ft = F(t-1) + alpha[A(t – 1) – F(t – 1)]
Where, Ft = forecast for period t
A(t – 1) = Actual value for period previous to t
F(t – 1) = forecast for period previous to t
alpha= smoothing constant
So using
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