For a canteen, the actual demand for disposable cups was 500 units in ...
Calculating Forecast using Simple Exponential Smoothing
Step 1: Calculation of Smoothing Coefficient
The smoothing coefficient (α) is given as 0.75.
Step 2: Calculation of Forecast for February
The actual demand for February is 600 units, and the forecast for January was 400 units. Therefore, the forecast error for January is given by:
Error = Actual demand - Forecast = 600 - 400 = 200
Now, using simple exponential smoothing, the forecast for February can be calculated as follows:
Forecast for February = Forecast for January + α x Error
= 400 + 0.75 x 200
= 550
Step 3: Calculation of Forecast for March
The forecast for March can be calculated using the same formula as used for February:
Forecast for March = Forecast for February + α x Error
= 550 + 0.75 x (600 - 550)
= 568.75
Rounding off the answer to the nearest integer, the forecast for March is 569 units.
Therefore, the correct answer is between 568,570.