On sheet one, set up the proper equations, for single exponential smoothing, the

Question

On sheet one, set up the proper equations, for single exponential smoothing, then find the optimal value of to minimize the single value of MAD, using solver. Full problem may be done using excel. Also, make a forecast for period 14 t+1. A) first, by using the alpha value of .4, fi nd the MAD, MSE. and the forecast for the 14th period. You do not need to save that information. B) then by using solver find the optimal value of alpha, that minimizes the value of MAD, and save that sheet. forecast for Period Sales forecast MAD MSE period 1 56 75 56.0 361.0 Decision 5 93 Variables 145 alpha 0.4 92 90 186 16 65 13

Explanation / Answer

The forecast for Month 14 is 84.97 for alpha = 0.4

These are the data i got when solved by solver

Here value of optimal alpha, i get is = 0.1798 or 0.18 and for that forecast for Month 14 = 83.98

F(t+1) = Y(t) + (1 - )F(t) = 0.4Y(t) + 0.6F(t) Period sales forecast MAD MSE 1 56 #N/A 2 75 56 19.00 361.0 3 15 63.60 -48.60 2362.0 alpha = 0.4 4 54 44.16 9.84 96.8 5 93 48.10 44.90 2016.4 6 145 66.06 78.94 6231.9 7 92 97.63 -5.63 31.7 8 90 95.38 -5.38 29.0 9 80 93.23 -13.23 175.0 10 186 87.94 98.06 9616.3 11 16 127.16 -111.16 12357.0 12 65 82.70 -17.70 313.2 13 99 75.62 23.38 546.7 14 84.97 Sum 34137.0

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