The actual demand for a product in a company is 79 units. The previous forecast and exponential smoothening factor are 84 units and 0.25, respectively. What will be the forecast (of the product units) for the next period? 

Concept:-

Simple exponential method -

This forecasting method is the most widely used of all forecasting techniques.

The simple exponential forecasting method has the formula for getting the forecasted value as,

F_t+1 = F_t + α(D_t - F_t) ​   .......Eqn(1)

Where

F_{t +1} = Forecasted value of time series at time t+1

F_t = Forecasted value of time series at time t

D_t = Actual value of time series at time t

α = Smoothing constant 

Given:-

F_t = 84, D_t = 79, α = 0.25, F_{t +1} =?

Calculation:-

By using equation (1), 

 Ft+1 = Ft + α(Dt - Ft) ​

F_t+1 = 84 + 0.25(79-84) = 84 - 1.25 = 82.75

F_t+1 = 82.75