Question

The marketing department needs to forecast the number of complaints arising from a particular defect in...

The marketing department needs to forecast the number of complaints arising from a particular defect in a product. The data for several months is supplied below. Be careful since the data is listed beginning with the most recent. The forecasting method to be used here is exponential smoothing accounting for seasonality with a smoothing constant of 0.75 and a previous forecast (with seasonality) of 390. Please round your forecast to the nearest whole number.

Jul 2020: 424 Jun 2020: 472 May 2020: 430 Apr 2020: 332 Mar 2020: 361 Feb 2020: 379
Jan 2020: 343 Dec 2019: 369 Nov 2019: 330 Oct 2019: 486 Sep 2019: 482 Aug 2019: 408
Jul 2019: 401 Jun 2019: 456 May 2019: 315 Apr 2019: 372 Mar 2019: 349 Feb 2019: 423
Jan 2019: 479 Dec 2018: 374 Nov 2018: 441 Oct 2018: 380 Sep 2018: 356 Aug 2018: 489
Jul 2018: 495 Jun 2018: 466 May 2018: 497 Apr 2018: 401 Mar 2018: 301 Feb 2018: 414
Jan 2018: 349 Dec 2017: 425 Nov 2017: 385 Oct 2017: 480
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Answer #1

Answer:

Exponential smoothing Forecast formula:

F (t+1)=                Ft+α(At-Ft)

Where,               

α = Smoothing constant = 0.75  

Ft = Forecast for immediate previous period      

At = Actual Demand for immediate previous period        

F (t+1) = Single exponential smoothing forecast for current period          

Forecast for previous period = Forecast for Oct 2017 = 390

Hence the forecast using Exponential Smoothing is as under:

Month and Year

Actual Number of defects
(At)

Forecast Number of defects
(Ft)

Oct-17

480

390

Nov-17

385

458

Dec-17

425

403

Jan-18

349

420

Feb-18

414

367

Mar-18

301

402

Apr-18

401

326

May-18

497

382

Jun-18

466

468

Jul-18

495

467

Aug-18

489

488

Sep-18

356

489

Oct-18

380

389

Nov-18

441

382

Dec-18

374

426

Jan-19

479

387

Feb-19

423

456

Mar-19

349

431

Apr-19

372

370

May-19

315

372

Jun-19

456

329

Jul-19

401

424

Aug-19

408

407

Sep-19

482

408

Oct-19

486

464

Nov-19

330

481

Dec-19

369

368

Jan-20

343

369

Feb-20

379

350

Mar-20

361

372

Apr-20

332

364

May-20

430

340

Jun-20

472

408

Jul-20

424

456

Smoothing constant = α =

0.75
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