.4.12 Consider the following actual and forecast demand levels for Big Mac hambu

Question

.4.12 Consider the following actual and forecast demand levels for Big Mac hamburgers at a local McDonald's restaurant: DAY Monday Tuesday Wednesday Thursday Friday ACTUAL DEMAND FORECAST DEMAND 72 68 48 84 80 The forecast for Monday was derived by observing Monday's demand level and setting Monday's forecast level equal to this demand level. Subsequent forecasts were derived by using expo- nential smoothing with a smoothing constant of 0.25. Using this exponential smoothing method, what is the forecast for Big Mac demand for Friday? Px

Explanation / Answer

since smoothing constant is 0.25

so demand forecast for friday =

0.25 * Actual demand on Thursday + (1-0.25) * Forecasted demand on Thursday

= 0.25 *48 + 0.75* 80

= 72

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