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Given a prior forecast demand value of 1,000, a related actual demand value of 1100, and a smoothing constant alpha of 0.2, what is the exponential smoothing forecast value?

Question

Given a prior forecast demand value of 1,000, a related actual demand value of 1100, and a smoothing constant alpha of 0.2, what is the exponential smoothing forecast value?

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Solution

The exponential smoothing forecast value can be calculated using the formula:

Forecast = Previous Forecast + α * (Actual Demand - Previous Forecast)

where α is the smoothing constant.

Step 1: Substitute the given values into the formula.

Forecast = 1000 + 0.2 * (1100 - 1000)

Step 2: Calculate the value inside the parentheses.

Forecast = 1000 + 0.2 * 100

Step 3: Multiply 0.2 by 100.

Forecast = 1000 + 20

Step 4: Add 1000 and 20.

Forecast = 1020

So, the exponential smoothing forecast value is 1020.

This problem has been solved

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