Question

A management analyst is using exponential smoothing to predict merchandise returns at an upscale branch of a department store chain. Given an actual number of returns of 35 items in the most recent period completed, a forecast of 49 items for that period, and a smoothing constant of 0.50, what is the forecast for the next period? Round your answer to 2 decimal places.

Answer 1

Ft+1 = Alpha*At + (1-Alpha)*Ft

Given that,

At = 35

Ft = 49

Alpha = 0.5

Ft+1 = 0.5*35 + (1-0.5)*49

Ft+1 = 17.50 + 24.50

Ft+1 = 42

Forecast for Next Period = 42.00