Simple exponential smoothing (with a 0.2) is beingused to forecast monthly beer sales at Gordon’s LiquorStore. After observing April’s demand, the predicted demandfor May is 4,000 cans of beer.a At the beginning of May, what is the prediction forJuly’s beer sales?b Actual demand during May and June is as follows:May, 4,500 cans of beer; June, 3,500 cans of beer. Afterobserving June’s demand, what is the forecast for July’sdemand?c The demand during May and June averages out to 4,5002 3,500 4,000 cans per month. This is the same asthe forecast for monthly sales before we observed theMay and June data. Yet after observing the May andJune demands for beer, our forecast for July demand hasdecreased from what it was at the end of April. Why?
Simple exponential smoothing (with a 0.2) is being
used to
Store. After observing April’s demand, the predicted demand
for May is 4,000 cans of beer.
a At the beginning of May, what is the prediction for
July’s beer sales?
b Actual demand during May and June is as follows:
May, 4,500 cans of beer; June, 3,500 cans of beer. After
observing June’s demand, what is the forecast for July’s
demand?
c The demand during May and June averages out to
4,500
2
3,500 4,000 cans per month. This is the same as
the forecast for monthly sales before we observed the
May and June data. Yet after observing the May and
June demands for beer, our forecast for July demand has
decreased from what it was at the end of April. Why?
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