The last period’s sales forecast was Rs 100 lakhs and demand was Rs 90 lakhs. What is the simple exponential smoothing sales forecast (in Rs lakhs) with alpha of 0.4 for the next period?

The last period’s sales forecast was Rs 100 lakhs and demand was Rs 90 lakhs. What is the simple exponential smoothing sales forecast (in Rs lakhs) with alpha of 0.4 for the next period? Correct Answer 96

Given

Last period sales forecast = 100 lakhs

Simple exponential sales forecast (α) = 0.4 for next year

Calculation

Error in forecast = 90 - 100

⇒ - 10

⇒ St = St - 1 + α(et)

⇒ 100 + (0.4)( - 10)

⇒ St = 100 - 4

∴ The simple exponential smoothing sales forecast (in Rs lakhs) with alpha of 0.4 for the next period is 96

 

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