Mgt613 GDB No. 1 solution

Total Marks 20
Starting Date Thursday, November 04, 2010
Closing Date Monday, November 08, 2010 Status Open Question/Description


Question: Given the weekly demand data, what are the exponential smoothing forecasts for periods 2-05 using a=0.10?
Week Demand 0.1 1 980 2 825 3 760 4 650 5

Note: Calculation along with the formula is required for each period's forecast. Students who give answers without calculation will be given low marks/no marks.

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solution:


Solution:
Formula for exponential smoothing:
1 1 1 ( ) t t t t F F a A F − − − = + −
Where
Ft = Forecast value for the coming time period
F t−1 = Forecast value in 1 past time period
At−1 = Actual occurrence in the 1 past time period
α = Alpha smoothing constant
Assume F1 =D1
F1 =980+(0.1)(980-980)=980
F2 =980+(0.1)(980-980)=980
F3 =980+(0.1)(825-980)=964.5
F4 =980+(0.1)(760-980)=958
F5=980+(0.1)(650-980)=947

Week Demand 0.1
1 980 980
2 825 980
3 760 964.5
4 650 958
5 947