Question

In: Statistics and Probability

The purchasing and supply department needs to forecast the number of tubes of adhesive being ordered....

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

Solutions

Expert Solution

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

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