Question

If you were using a simple exponential smoothing forecast model (alpha value equal to 0.30) that generated a forecast of 25.10 units for the most recently completed week, which has observed a demand of 31 units, what would be your forecast of demand for the upcoming week?

Answer 1

The simple exponential smoothing is a method suitable for predicting data with no style or seasonal pattern. While in Moving Averages the past observations are weighted similarly, Exponential Smoothing allocates exponentially lessening weights as the observation get older.

Forecast for upcoming week = 25.10 + 0.3 (31 – 25.10) = 26.87