Question: Problem 1 A dry cleaner uses exponential smoothing to forecast equipment usage at its main plant. August usage was forecasted to be 85% capacity; actual

Problem 1 A dry cleaner uses exponential smoothing to forecast equipment

Problem 1 A dry cleaner uses exponential smoothing to forecast equipment usage at its main plant. August usage was forecasted to be 85% capacity; actual usage was 89%. A smoothing constant of 12 is used. a. Prepare a forecast for September. b. Assuming actual September usage of 94%, prepare a forecast for October. The concept used to solve the problem - Exponential Smoothing Definition: Each new forecast is based on the previous forecast plus a percentage of the difference between that forecast and the actual value of the series at that point. Formula: FiFk+1+(A1,Ft1) F= Forecast A= Actual Ft= Forecast for period t Ft,i= Forecast for the previous period (i.e,, period t1) The = Smoothing constant (percentage) A=Actual demand or sales for the previous period Chapter 3 Applying the Concepts Excel Example: September forecast = August forecast + (Actual August demand-August forecast) September forecast =

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