US CMA Part 1 · Chapter 6 · Question 22 of 22
A company uses exponential smoothing with a smoothing constant (alpha) of 0.3. The forecast for May was 500 units and actual May demand was 540 units. What is the forecast for June?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 512 units
Explanation
New forecast = previous forecast + alpha x (actual - previous forecast) = 500 + 0.3 x (540 - 500) = 500 + 12 = 512 units. Equivalently, 0.3 x 540 + 0.7 x 500.
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