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Excel: exponential smoothing forecast

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Develop a forecast for years 2 through 12 using exponential smoothing with ? = .4 and a forecast for year 1 of 6. Plot your new forecast on a graph with the actual data and the naive forecast. Based on a visual inspection, which forecast is better?

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We have the Exponential smoothing forecast,
Ft = Ft-1 + α (At-1 - Ft-1)
i.e., New ...

Solution Summary

In this solution we use Excel to develop two forecasts based on the given parameters and data and highlights which of these forecasts is better.

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Exponentially Smoothed Forecast, MAD, MAPD in EXCEL

The manager fo the Petroco Service Station wants to forecast the demand for unleaded gasoline next month so that the proper number of gallons can be ordered from the distributor. The owner has accumulated the following data on demand for unleaded gasoline from sales during the past ten months:

Month Gasoline Demanded (gal)
Oct 800
Nov 775
Dec 630
Jan 500
Feb 645
March 690
April 730
May 810
June 1,200
July 980

Compute an exponentially smoothed forecast using an symbol a which stand for a weighting factor referred to as the smoothing constant of a value of .30

Compute an adjusted exponentially smoothed forecast with a which stand for a weighting factor referred to as the smoothing constant =.30 and B.20

Compute the two forecast by using MAPD and indicate which seems to be more accurate

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