Question

The Questor Corporation has experienced the following sales pattern over a 10-year period:

Complete the table using a first-order exponential smoothing model with a w=0.9w=0.9 to forecast sales in 2017.

Year	Sales (YtYt)	Exponential Smoothing (YˆtY^t)
	(000)	(w = 0.9)
2007	187
2008	214	187
2009	216	=216,203, or 211
2010	234	= 228,205, or 216
2011	268	= 238, 222, or 232
2012	277	= 287,255, or 264
2013	302	= 263, 276, or 293
2014	302	= 323, 299, or 287
2015	318	=287, 302, or 320
2016	350	=302, 321, or 316
2017	*	= 356, 347, or 302

Answer 1

The above solution can be derived in several medium.

1. If solved with in Excel through Data Analysis Tool :

Step 1 : Enter the data in excel

Step 2 : On Data Tab, click Data Analysis and select Exponential Smoothing and click OK

Step 3 : Input Range is Actual data, hence select the range of data

Damping Factor is 1-w i.e alpha ,hence here damping factor is 1-.9 = .1

Select Output Range and check chart output if you need a chart presentation. Click OK.

OR

2.

		Exponential Smoothing w=.9, a=.1
Year	Sales	0.1
2007	187
2008	214	187
2009	216	211
2010	234	216
2011	268	232
2012	277	264
2013	302	276
2014	302	299
2015	318	302
2016	350	316
2017	FORECAST	347

Here, Exponential Smoothing w=.9 hence a=.1

Formula used here is

Forecast = Forecasted Sales of Previous yr+ 0.1 * (Actual Sales of previous yr - Forecast Sales previous yr )

Here for 2017 = 350 + .1 * ( 316 - 350 )

= 350 + .1 * (-34)

= 350 + (-3.4)

= 346.6 = 347