A company that distributes health food products uses simple exponential smoothin

Question

A company that distributes health food products uses simple exponential smoothing with a smoothing parameter of the weekly demand for its brand of oat-bran cereal. The most recent weeks of demand (number of boxes ordered) for this product are shown below. To initialize the forecasts, the company simply uses the first value of the demand series, values associated with each week, and then give a forecast for week Note that some of the intermediate values have been computed for you. Do all calculations to at least three decimal places to forecast Fill in the smoothed Week Demand Smoothed Series 377 607 322 722 602 499 361 160 377.000 402.023 584.410 594.436 540.037 437.986 4 8 Forecast for week 9 = lear Undo Help

Explanation / Answer

Here we have to find the smoothing parameter a.

We will calculate it by Week 3 and Week 4 forecast.

F4 = a Y3 + (1 -a) F3

584.410 = 722 a + ( 1 - a) * 402.023

584.410 = 722 a + 402.023 - 402.023 a

319.977 a = 182.387

a = 0.57

The table is given below

Forecast for week 9 = 160 * 0.57 + 437.986 * 0.43 = 279.534

Week(t) Demand(yt) Smmothed Series (y^t) 1 377 377 2 607 508.1 3 322 402.023 4 722 584.4099 5 602 594.4363 6 499 540.0376 7 361 437.9862 8 160 279.534

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