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For a canteen, the actual demand for disposable cups was 500 units in January and 600 units in February. The forecast for the month of January was 400 units. The forecast for the month of March considering smoothing coefficient as 0.75 is _______.
    Correct answer is between '568,570'. Can you explain this answer?
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    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.
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    For a canteen, the actual demand for disposable cups was 500 units in January and 600 units in February. The forecast for the month of January was 400 units. The forecast for the month of March considering smoothing coefficient as 0.75 is _______.Correct answer is between '568,570'. Can you explain this answer?
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