Question

Demand for a part in January is 200; February 50; March 150. If a nine-month moving average is used and forecasting for January is 100 units then the April forecast using simple exponential method is

• A. $120$
• B. $115$
• C. $126$
• D. $106$

Answer 1

The correct option is B $115$

$\alpha =\frac{2}{n+1}\text{(given n = 9)}$

$=\frac{2}{9+1}=0.2$

$F_{\text{feb}}=F_{\text{jan}}+(D_{\text{jan}}-F_{\text{jan}})\alpha$

$=100+(200-100)0.2=120$

$F_{\text{mar}}=F_{\text{feb}}+(D_{\text{Feb}}-F_{\text{feb}})\alpha$

$=120+(50-120)0.2=106$

$F_{\text{april}}=F_{\text{mar}}+(D_{\text{mar}}-F_{\text{mar}})\alpha$

$=106+(150-106)0.2$

$=114.8\approx 115$