Question

The following data-series refers to a company's revenue.

Year	Revenue
1	1016
2	921
3	934
4	976
5	930
6	1052
7	1184
8	1089
9	1087
10	1154
11	1330
12	1980
13	2223
14	2203
15	2514
16	2726
17	3185
18	3351
19	3438

Use Simple Exponential Smoothing, with an alpha of 0.76 and an initial level value of 1583 to forecast values for the next 10 years after Year 19.

Please create and upload your answers in an Excel file with formulas visible.

Answer 1

Let shows the actual value for year t and shows the forecasted value of year t. So exponential smoothing forecast formula is

Following table shows the forecasted value using exponential smoothing:

Year	Revenue	Forecast	Formula
1	1016	1583	1583
2	921	1152.08	=(0.76*B2)+(0.24*C2)
3	934	976.4592	=(0.76*B3)+(0.24*C3)
4	976	944.190208	=(0.76*B4)+(0.24*C4)
5	930	968.3656499	=(0.76*B5)+(0.24*C5)
6	1052	939.207756	=(0.76*B6)+(0.24*C6)
7	1184	1024.929861	=(0.76*B7)+(0.24*C7)
8	1089	1145.823167	=(0.76*B8)+(0.24*C8)
9	1087	1102.63756	=(0.76*B9)+(0.24*C9)
10	1154	1090.753014	=(0.76*B10)+(0.24*C10)
11	1330	1138.820723	=(0.76*B11)+(0.24*C11)
12	1980	1284.116974	=(0.76*B12)+(0.24*C12)
13	2223	1812.988074	=(0.76*B13)+(0.24*C13)
14	2203	2124.597138	=(0.76*B14)+(0.24*C14)
15	2514	2184.183313	=(0.76*B15)+(0.24*C15)
16	2726	2434.843995	=(0.76*B16)+(0.24*C16)
17	3185	2656.122559	=(0.76*B17)+(0.24*C17)
18	3351	3058.069414	=(0.76*B18)+(0.24*C18)
19	3438	3280.696659	=(0.76*B19)+(0.24*C19)
20		3400.247198	=(0.76*B20)+(0.24*C20)

The forecast for year 20 is: 3400.25

Following is the screen shot of excel