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Calculate a forecast using a trend adjusted smoothing.

The business analyst for Ace Business Machines, Inc. wants to forecast this year's
demand for manual typewriters based on the following historical data:

TIME PERIOD-------DEMAND
5 years ago---------------900
4 years ago--------------- 700
3 years ago--------------- 600
2 years ago--------------- 500
Last year---------------- 300

What is the forecast for this year using trend adjusted (double) smoothing with alpha(1) = 0.3 and alpha(2) = 0.2, if the forecast for last year was 310, the forecast for two years ago was 430, and the trend estimate for last year's forecast was -150?

* Please use 310, 430, -150 instead (if the forecast for last year was 310, the forecast for two years ago was 430, and the trend estimate for last year's forecast was -150).

Solution Preview

Let alpha 1 = A1 and alpha 2 = A2

The basic formulas for double exponential smoothing are
Bt= A2(St - St-1) + ...

Solution Summary

The solution is very detailed including the math and narrative to aid in fully understanding the problem.

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