Suppose that Jane's company uses exponential smoothing to make forecasts. Further suppose that last period's demand forecast was for 500 units, and last period's actual demand was 480 units. Jane's company uses an alpha value of. 20. Today Jane's boss asked her to prepare a forecast for this period. What should that forecast be?

forecast for the period = 496

Explanation:

given data

demand forecast = 500 units

actual demand = 480 units

alpha value = 0.20

to find out

forecast for this period

solution

we get here forecast for the period that is express as

forecast for the period = Alpha * actual demand + (1 - alpha) * demand forecast ... 1

put here value we get

forecast for the period = 0.20 * 480 + (1 - 0.20) * 500

forecast for the period = 96 + 400

forecast for the period = 496