In: Statistics and Probability
The purchasing and supply department needs to forecast the number of tubes of adhesive being ordered. The data for several months is supplied below. Be careful since the data is listed beginning with the most recent. The forecasting method to be used here is exponential smoothing accounting for seasonality with a smoothing constant of 0.35 and a previous forecast (with seasonality) of 635. Please round your forecast to the nearest whole number.
Jul 2020: 588 | Jun 2020: 508 | May 2020: 689 | Apr 2020: 500 | Mar 2020: 689 | Feb 2020: 540 |
Jan 2020: 568 | Dec 2019: 680 | Nov 2019: 695 | Oct 2019: 565 | Sep 2019: 680 | Aug 2019: 514 |
Jul 2019: 696 | Jun 2019: 516 | May 2019: 629 | Apr 2019: 671 | Mar 2019: 686 | Feb 2019: 506 |
Jan 2019: 589 | Dec 2018: 555 | Nov 2018: 605 | Oct 2018: 538 | Sep 2018: 607 | Aug 2018: 540 |
Jul 2018: 650 | Jun 2018: 599 | May 2018: 528 | Apr 2018: 681 | Mar 2018: 679 | Feb 2018: 535 |
Jan 2018: 587 | Dec 2017: 566 |
Solution:
The formula to find the forecasting using exponential smoothing method is Ft+1=Dt+(1-)Ft
where Ft+1 is the forecast demand for period t.
is the smoothing constant
Dt is the previous period's actual demand
Ft is the previous period's forecast demand
Given:=0.35 and Pervious forecast=635
Period | Demand | Forecast(Ft+1=Dt+(1-)Ft) |
Dec 2017: | 566 | 635 |
Jan 2018: | 587 | (0.35*566)+(1-0.35)635=611 |
Feb 2018: | 535 | (0.35*587)+(1-0.35)611=603 |
Mar 2018: | 679 | (0.35*535)+(1-0.35)603=579 |
Apr 2018: | 681 | (0.35*679)+(1-0.35)579=614 |
May 2018: | 528 | (0.35*681)+(1-0.35)614=637 |
Jun 2018: | 599 | (0.35*528)+(1-0.35)637=599 |
Jul 2018: | 650 | (0.35*599)+(1-0.35)599=599 |
Aug 2018: | 540 | (0.35*650)+(1-0.35)599=617 |
Sep 2018: | 607 | (0.35*540)+(1-0.35)617=590 |
Oct 2018: | 538 | (0.35*607)+(1-0.35)590=596 |
Nov 2018: | 605 | (0.35*538)+(1-0.35)596=576 |
Dec 2018: | 555 | (0.35*605)+(1-0.35)576=586 |
Jan 2019: | 589 | (0.35*555)+(1-0.35)586=575 |
Feb 2019: | 506 | (0.35*589)+(1-0.35)575=580 |
Mar 2019: | 686 | (0.35*506)+(1-0.35)580=554 |
Apr 2019: | 671 | (0.35*686)+(1-0.35)554=600 |
May 2019: | 629 | (0.35*671)+(1-0.35)600=625 |
Jun 2019: | 516 | (0.35*629)+(1-0.35)625=626 |
Jul 2019: | 696 | (0.35*516)+(1-0.35)626=588 |
Aug 2019: | 514 | (0.35*696)+(1-0.35)588=626 |
Sep 2019: | 680 | (0.35*514)+(1-0.35)626=587 |
Oct 2019: | 565 | (0.35*680)+(1-0.35)587=619 |
Nov 2019: | 695 | (0.35*565)+(1-0.35)619=600 |
Dec 2019: | 680 | (0.35*695)+(1-0.35)600=633 |
Jan 2020: | 568 | (0.35*680)+(1-0.35)633=650 |
Feb 2020: | 540 | (0.35*568)+(1-0.35)650=621 |
Mar 2020: | 689 | (0.35*540)+(1-0.35)621=593 |
Apr 2020: | 500 | (0.35*689)+(1-0.35)593=626 |
May 2020: | 689 | (0.35*500)+(1-0.35)626=582 |
Jun 2020: | 508 | (0.35*689)+(1-0.35)582=620 |
Jul 2020: | 588 | (0.35*508)+(1-0.35)620=581 |