Given a previous forecast value of 99, actual demand of 103, and an alpha of .4, what would be the exponential smoothing forecast for the next period?

To find the exponential smoothing forecast for the next period, you can use the formula:

Forecast for next period = (α * Actual Demand) + ((1 - α) * Previous Forecast)

In this case, you have:

• Previous forecast = 99
• Actual demand = 103
• Alpha (α) = 0.4

Now substituting the values into the formula:

1. Calculate the contribution from the actual demand: α * Actual Demand = 0.4 * 103 = 41.2

2. Calculate the contribution from the previous forecast: (1 - α) * Previous Forecast = 0.6 * 99 = 59.4

3. Add these two contributions together to get the new forecast: Forecast for next period = 41.2 + 59.4 = 100.6

Therefore, the exponential smoothing forecast for the next period is 100.6. This value represents a blend of the most recent actual demand and the previous forecast, adjusted by the smoothing factor, alpha. The choice of 100.6 reflects a more recent demand trend while still considering past forecasts, which is a key characteristic of exponential smoothing.