Example of exponential smoothing, Mathematics

Example of Exponential Smoothing

By using the previous example and smoothing constant 0.3 generate monthly forecasts

Months

Sales

Forecasts: a = 0.3

January

1200

 

February

1280

1200

March

1310

1224

April

1270

1250

May

1190

1256

June

1290

1233

July

1410

1250

August

1360

1283

September

1430

1327

October

1280

1358

November

1410

1335

December

1390

1357

Solution

Since there were no forecasts before January we take Jan to be the forecast for February.

∴ Feb - 1200

For March;

March forecast = Feb forecast + 0.3 ( Feb sales - Feb forecast)

= 1200 + 0.3 (1280 - 1200) =1224

Note:

  • The value a lies between 1 and 0.
  • The higher a value, the extra forecast is sensitive to the current status.
Posted Date: 2/16/2013 7:38:17 AM | Location : United States







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