Small Industries PLC uses exponential smoothing with trend to forecast monthly s

Question

Small Industries PLC uses exponential smoothing with trend to forecast monthly sales. At the end of March, Small Industries PLC hopes to forecast sales for April. The trend through February has been 28 additional unit sales per month (Tt-1). Average sales have been 305 units per month (St-1). The demand for March was 341 units (At). Small Industries PLC uses alpha = 0.3 and Beta = 0.2. Following the second stage of the trend-adjusted exponential smoothing method, smooth the trend and calculate Tt for Small Industries PLC.

Explanation / Answer

Forecast for April, St = alpha* Actual of Mar + (1-alpha)*(Forecast of March) = 0.3*341 + 0.7*305 = 315.8

Trend for april, Tt = Beta *(St -St-1) + (1-Beta)*Tt-1 = 0.2*(315-305) + 0.8*28 = 24.4

Therafor smoothened forecast = 315+24.4 = 339.4

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