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Forecasting Techniques : Exponential Smoothing

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The following table shows the demand for an important item for months January through April. You decided to use the exponential smoothing with alpha= 0.3 and the forecast for January was 52. What is the forecasted demand for May?

Month Demand
January 55
February 52
March 56
April 64

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Solution Summary

Solution develops a demand forecast for the given period by using Exponential Smoothing Technique.

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Forecasting Techniques: Exponential Smoothing

YEAR 1 2 3 4 5 6 7 8 9 10 11
DEMAND 7 9 5 9 13 8 12 13 9 11 7

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

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