La Villa is a ski resort in the Italian Alps. Many guests visit the town, howeve

Question

La Villa is a ski resort in the Italian Alps. Many guests visit the town, however, most of them come in the winter season because of the phenomenal skiing. A group of hotels has analyzed their demand for the last three years. Fill in the table below. Using a smoothing parameter of 0.25 and an initial forecast of 17,000, forecast demand for the first four quarters in 2015 (Round Seasonal Index to 3 decimal places and all the other answers to 2 decimal places.) aseasonalized Smoothed Demand Season Seasonal Year Qtr Demand Quarter Average Forecast seasonalized Index Demand Forecast 1.247 2 14,666.67 0.837 0.825 1.091 22,100 14,900 13,700 19,000 20,100 17,000 16,500 18,700 23,400 12,100 13,200 19,700 17,722.53 17,180.63 2015Q1 17,801.67 17,335.89 2015Q2 16.606060 17,152.96 2015Q3 17,4 15.22 172175101201504 16,118.6816,942.80 20.310.63 17,784 20.000.00 18.338.00 17,140.24 18,037.56 18,765.04 18,219.43 14.456.390| 17,280.82 16,000.0016,960.16 18,056.83 17,233.27 2012 | 21.866.67 21,757.18 2 3 114.466.67 4 19,133.33 17,533.34 4 2013 Overall 2 .76 4 2014 1 4

Explanation / Answer

First, let's see the Exponential Smoothing Formula:

Ft+1 = Dt + (1)Ft

Here,

Dt = Actual Demand for period t from last year

Ft = Forecast for period t

Ft+1 = Forecast for period t+1

= 0.25

Let's calculate for 2015

F1 = 0.25(23,400) + 0.75(17,000) = 18,600

F2 = 0.25(12,100) + 0.75(18,600) = 16,975

F3 = 0.25(13,200) + 0.75(16,975) = 16,031.25

F4 = 0.25(19,700) + 0.75(16,031.25) = 16,948.44

Hence,

2015Q1 = 18,600

2015Q2 = 16,975

2015Q3 = 16,031.25

2015Q4 = 16,948.44

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