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The sales of car in a showroom in first, second and third months are 70, 68 and 82 respectively. With the smoothing constant of 0.4, Find the forecast for the next month.
- a)70
- b)69.25
- c)74.32
- d)70.10
Correct answer is option 'C'. Can you explain this answer?
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The sales of car in a showroom in first, second and third months are ...
Ft = Ft-1+ α (Dt-1 - Ft-1)
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D1 = 70, D2=68, D3= 82 (given)
Note:- If initial forecasting is not given. you can assume it equal to the demand of that month.
Therefore, F1=70
Now according to formula given above,
F2= F1+α(D1-F1)= 70+0.4(70-70)= 70
F3= F2+α(D2-F2)= 70+0.4(68-70)= 69.2
Therefore, F4= F3+α(D3-F3)= 69.2+0.4(82-69.2)= 74.32
Most Upvoted Answer
The sales of car in a showroom in first, second and third months are ...
Exponential Smoothing Forecasting:
Exponential smoothing is a technique used in time series analysis to project future data points based on previously observed data. It involves assigning exponentially decreasing weights to past observations.
Given Data:
- Sales in the first month = 70
- Sales in the second month = 68
- Sales in the third month = 82
- Smoothing constant (α) = 0.4
Calculation:
The forecast for the next month can be calculated using the formula:
Forecast for next month = α * (Actual sales in the current month) + (1 - α) * Forecast for the current month
Applying the formula:
Forecast for the fourth month = 0.4 * 82 + 0.6 * (0.4 * 68 + 0.6 * 70)
= 32.8 + 0.6 * (27.2 + 42)
= 32.8 + 0.6 * 69.2
= 32.8 + 41.52
= 74.32
Therefore, the forecast for the next month is 74.32, which corresponds to option C.
Exponential smoothing is a technique used in time series analysis to project future data points based on previously observed data. It involves assigning exponentially decreasing weights to past observations.
Given Data:
- Sales in the first month = 70
- Sales in the second month = 68
- Sales in the third month = 82
- Smoothing constant (α) = 0.4
Calculation:
The forecast for the next month can be calculated using the formula:
Forecast for next month = α * (Actual sales in the current month) + (1 - α) * Forecast for the current month
Applying the formula:
Forecast for the fourth month = 0.4 * 82 + 0.6 * (0.4 * 68 + 0.6 * 70)
= 32.8 + 0.6 * (27.2 + 42)
= 32.8 + 0.6 * 69.2
= 32.8 + 41.52
= 74.32
Therefore, the forecast for the next month is 74.32, which corresponds to option C.
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The sales of car in a showroom in first, second and third months are 70, 68 and 82 respectively. With the smoothing constant of 0.4, Find the forecast for the next month.a)70b)69.25c)74.32d)70.10Correct answer is option 'C'. Can you explain this answer?
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