Answer to Question #265227 in Management for Sahba

Question

Use the basic exponential smoothing method with Alfa =0.2 and the two period moving average

Method to complete the table below

T Xt St. Mat

0 41.00

1 42

2 47

3 51

4 53

5 55

6 58

Which method seems more accurate?why

Answer 1

exponential smoothing method with Alfa =0.2 

The closer ALPHA is to 1, the less the prior data points enter into the smooth. In practice, ALPHA is usually set to a value between 0.1 and 0.3.

The exponential smoothing calculation is as follows: The most recent period's demand multiplied by the smoothing factor. The most recent period's forecast multiplied by (one minus the smoothing factor). S = the smoothing factor represented in decimal form (so 35% would be represented as 0.35).