Question

Consider the following daily time series representing the number of clients visiting the Small Business Development Center over the previous 10 days.

Day	Clients
1	1
2	2
3	1
4	3
5	0
6	2
7	1
8	1
9	2
10	3

Step 1 of 2:

What is the Simple Exponential Smoothing Forecast for day 11 (t = 11) assuming that the smoothing constant, alpha = 0.35?
Round to 2 decimal places.

Consider the following daily time series representing the number of clients visiting the Small Business Development Center over the previous 10 days.

Day	Clients
1	1
2	2
3	1
4	3
5	0
6	2
7	1
8	1
9	2
10	3

Step 2 of 2:

What is the Simple Exponential Smoothing Forecast for day 11 (t = 11) assuming that the smoothing constant, alpha = 0.6?
Round to 2 decimal places.

Answer 1

(1): The formula for exponential smoothing is: new forecast = last period’s forecast + alpha*(last period’s actual number – last period’s forecast)

Here alpha = 0.35 and we have to forecast for day 11. Assume forecast for day 1 to be 1. Thus:

Day	Clients	alpha	Forecast
1	1	0.35	1.0000
2	2		1.0000
3	1		1.3500
4	3		1.2275
5	-		1.8479
6	2		1.2011
7	1		1.4807
8	1		1.3125
9	2		1.2031
10	3		1.4820
11			2.0133

Thus forecast for day 11 = 2.01 (2 decimal place)

The formulas used can be seen below:

(2): Here alpha changes to 0.6 and so the table will be:

Day	Clients	alpha	Forecast
1	1	0.60	1.0000
2	2		1.0000
3	1		1.6000
4	3		1.2400
5	-		2.2960
6	2		0.9184
7	1		1.5674
8	1		1.2269
9	2		1.0908
10	3		1.6363
11			2.4545

Thus forecast for day 11 =  2.45 (2 decimal place)

(Note the formulas will be same as 1 above just that alpha value will be 0.60 here instead of 0.35. Thus cell C2 will become 0.60 in part 2)