Question

“A recent report produced by Shop n Pay’s chief demand planner has revealed that the retailer’s...

“A recent report produced by Shop n Pay’s chief demand planner has revealed that the retailer’s reliance on simple exponential smoothing to forecast demand for its products is partly responsible of the significant pile-up of goods in the company’s main distribution centre.”

Question

In light of the statement above, highlight any THREE (3) weakness of the simple exponential smoothing method of forecasting.

Homework Answers

Answer #1

Disadvantages of Exponential Smoothing

Disadvantages:

1. The forecasts lag behind the actual trend.

The name itself suggests, smoothing which means that the random variations are neglected. Hence, the actual trends are overlooked.

2. Trends are not readily taken care of:

Exponential smoothing works best for short time periods. The presence of cyclical and seasonal leads to inaccuracies in the forecasts.

3. No fixed starting method:

In case of no initial forecasts, there is no fixed method as to how should the forecast be proceeded with.

4. Higher weightage on the past data often leads to severe impacts on the early forecasts.

5. It is not suitable for longer periods.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
“A recent report produced by Shop n Pay’s chief demand planner has revealed that the retailer’s...
“A recent report produced by Shop n Pay’s chief demand planner has revealed that the retailer’s reliance on simple exponential smoothing to forecast demand for its products is partly responsible of the significant pile-up of goods in the company’s main distribution centre.” In light of the statement above, highlight any THREE (3) weakness of the simple exponential smoothing method of forecasting.                                                                                                                   
Shop n Pay is a fast-growing, diversified South African-based retailer dealing in fast moving consumer goods...
Shop n Pay is a fast-growing, diversified South African-based retailer dealing in fast moving consumer goods (FMCGs). The recently-appointed operations manager of Shop n Pay, Mr Benedict Msimanga, is currently reviewing all operations management policies of the company and has gathered the following information: A. Internationalisation strategy With the recent conclusion of the African Continental Free Trade Agreement (AfCFTA), the company is in the process of expanding its operations to key markets on the African continent. Countries on the radar...
Asia’s e-commerce landscape has been booming in recent years. The swift adoption of smartphones and greater...
Asia’s e-commerce landscape has been booming in recent years. The swift adoption of smartphones and greater access to the internet has allowed consumers in the region to be a major force in the global digital economy. The expansion looks set to continue at a rapid pace. According to a November 2018 report by Fitch Solutions, e-commerce sales in the region are forecast to increase by 14.2% this year, with an estimated average annual increase of 14% over the medium term...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how...
Delta airlines case study Global strategy. Describe the current global strategy and provide evidence about how the firms resources incompetencies support the given pressures regarding costs and local responsiveness. Describe entry modes have they usually used, and whether they are appropriate for the given strategy. Any key issues in their global strategy? casestudy: Atlanta, June 17, 2014. Sea of Delta employees and their families swarmed between food trucks, amusement park booths, and entertainment venues that were scattered throughout what would...