Given the following information, what is the new forecast for product A using exponential smoothing? Alpha - .7, Actual Demand - 600, Old Forecast - 562, Seasonal Index - 2.1

To calculate the new forecast for product A using exponential smoothing, the formula utilized is:

New Forecast = (Alpha * Actual Demand) + ((1 - Alpha) * Old Forecast * Seasonal Index)

Given:

• Alpha = 0.7

• Actual Demand = 600

• Old Forecast = 562

• Seasonal Index = 2.1

Now, applying the values into the formula:

1. Calculate the adjusted old forecast by incorporating the seasonal index:

Adjusted Old Forecast = Old Forecast * Seasonal Index = 562 * 2.1 = 1180.2

2. Apply the exponential smoothing formula:

New Forecast = (0.7 * 600) + (0.3 * 1180.2)

Breaking it down:

• 0.7 * 600 = 420

• 0.3 * 1180.2 ≈ 354.06

So,

New Forecast = 420 + 354.06 ≈ 774.06

However, if we consider the seasonal adjustment accurately, we should note that the actual demand is already factored into the calculation directly without further scaling:

New Forecast = (0.7 * 600) + (0.3