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Actual demand in Feb was158 TVs. If the smoothing constant is α=1.3, the demand forecast for March, using the exponential smoothing model, will be: a)148 TV b)151 TV c)153 TV d)158 TV
Simple forecast by averaging forecast and actual, is 153 the answer is c, we need buffer stock in april if sales is not on target on march, sales sometimes cannot be predicted due to demand trends and competior activites
Answer is (B)151 TVs
The Formula for exponential smoothing is:
F(t+1) = α [A(t)] + (1-α) [(t)]
Where:
F = Forecast
A= Actual
t = Current Time Period
α = the smoothing constant
February forecast = F(t) =148
February Actual = A(t) =158
March Forecast = F(t+1) = α [A(t)] + (1-α) [(t)] = (0.3)(158) + (1-0.3)(148) = 151 TVs
