Question

Assume that your stock of sales merchandise is maintained based on the forecast demand. If the distributor's sales personnel call on the first day of each month, compute your forecast sales by each of the three methods requested here.

	ACTUAL
June	142
July	182
August	121

Using single exponential smoothing and assuming that the forecast for June had been 120, forecast sales for September with a smoothing constant α of 0.30. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Question 20 options:

	133.56
	126.67
	136.55
	128.48

Answer 1

Answer:

Let,

At-1 = Actual sales for the previous month

Ft-1 = Forecast sales for the previous month

α = Alpha = 0.30 (As given in the question)

Then,

Ft = Simple exponential smoothing forecast for the current period = Ft-1 + α (At-1 - Ft-1)

Take the initial forecast value for the first month (June) = 120 (As given in the question)

Hence, we get the table showing the actual and forecast values as mentioned in the below table:

At = Actual Values, Ft = Forecast Values, t = No. of a particular month

Calculations:

Hence, the correct answer to the given question would be an option c (i.e., the third option)

(Kindly raise an upvote for this answer, if you found it useful)