Marie Bain is the production manager at a company that manufactures hot water he
ID: 464389 • Letter: M
Question
Marie Bain is the production manager at a company that manufactures hot water heaters. Marie needs a demand forecast for the next few years to help decide whether to add new production capacity. The company's sales history (in thousands of units) is shown in the table below. Use exponential smoothing with trend adjustment to forecast demand for period 6. The initial forecast for period 1 was 11 units; the initial estimate of trend was 0. The smoothing constants are = .3 and = .1 Please show how to work. Thank you in advance.
Period
Actual
Forecast
Trend
FIT
1
12
11.00
0.00
2
15
3
16
4
16
5
18
6
20
Period
Actual
Forecast
Trend
FIT
1
12
11.00
0.00
2
15
3
16
4
16
5
18
6
20
Explanation / Answer
We use exponential smoothing with trend adjustment or double exponential smoothing.
Demand for period 6 = 15.737 units
Period Actual Forecast Trend FIT 1 12 11 0 11 2 15 11.3 0.03 11.33 3 16 12.41 0.138 12.548 4 16 13.487 0.2319 13.7189 5 18 14.2409 0.2841 14.525 6 20 15.36863 0.368463 15.73709Related Questions
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