a)
The single exponential smoothing forecast
The demand for the last 10 months
=0.3
F t=F t −1 +α ( A t −1 −F t −1)
Month Actual demand Forecast
1 31 31.000
2 34 31.000
3 33 31.900
4 35 32.230
5 37 33.061
6 36 34.243
7 38 34.770
8 40 35.739
9 40 37.017
10 41 37.912
F 2=F1 +α ( A 1−F 1 ) = 31 + 0.30 x (31 - 31) = 31
F 3=F2 + α ( A 2−F 2 ) = 31 + 0.30 x (34 - 31) = 31.9
F 4=F 3 +α ( A 3−F 3 ) = 31.9 + 0.30 x (33 - 31.9) = 32.23
F 5=F 4 +α ( A 4−F 4 ) = 32.23 + 0.30 x (35 - 32.23) = 33.061
F 6=F 5+ α ( A5 −F 5 ) = 33.06 + 0.30 x (37 - 33.06) = 34.243
F 7=F 6+ α ( A6 −F6 ) = 34.24 + 0.30 x (36 - 34.24) = 34.77
F 8=F 7+ α ( A7 −F7 ) = 34.77 + 0.30 x (38 - 34.77) = 35.739
F 9=F 8+ α ( A 8−F 8 ) = 35.74 + 0.30 x (40 - 35.74) = 37.017
F 10=F9 + α ( A 9−F 9 ) = 37.02 + 0.30 x (40 – 37.02) = 37.912
b)
The exponential smoothing with trend forecast
The demand for the last 10 months
=0.3
=0.3
FIT t=F t +T t
F t=F t −1 +α ( A t −1 −FIT t −1)
T t=T t −1 + δ ( Ft −FIT t−1 )
FIT 1=F1 +T 1 = 30 + 1 = 31
Month Actual demand Ft Tt FIT t
1 31 30.000 1.000 31.000
2 34 30.000 0.700 30.700
3 33 30.990 0.787 31.777
4 35 31.357 0.661 32.018
5 37 32.252 0.731 32.983
6 36 33.457 0.873 34.330
7 38 33.958 0.762 34.719
8 40 34.942 0.828 35.770
9 40 36.211 0.961 37.171
10 41 37.059 0.927 37.986
F 2=F1 +α ( A 1−FIT 1 ) = 30 + 0.3 x (31 - 31) = 30
T 2=T 1 + δ ( F2 −FIT 1 ) = 1 + 0.3 x (30 - 31) = 0.7
FIT 2=F2 +T 2 = 30 + 0.7 = 30.7
F 3=F2 + α ( A 2−FIT 2 ) = 30 + 0.3 x (34 – 30.7) = 30.99
T 3=T 2+ δ ( F 3−FIT 2 ) = 0.7 + 0.3 x (30.99 – 30.7) = 0.787
FIT 3=F 3 +T 3 = 30.99 + 0.787 = 31.777
F 4=F 3 +α ( A 3−FIT 3 ) = 30.99 + 0.3 x (33 – 31.78) = 31.357
T 4=T 3 +δ ( F 4 −FIT 3 ) = 0.787 + 0.3 x (31.356 – 31.78) = 0.661
FIT 4=F 4 +T 4 = 31.36 + 0.661 = 32.018
F 5=F 4 +α ( A 4−FIT 4 ) = 31.36 + 0.3 x (35 – 32.02) = 32.252
T 5=T 4 +δ ( F 5−FIT 4 ) = 0.661 + 0.3 x (32.25 – 32.02) = 0.731
FIT 5=F 5 +T 5 = 32.25 + 0.73 = 32.983
F 6=F 5+ α ( A5 −FIT 5 ) = 32.25 + 0.3 x (37 – 32.98) = 33.457
T 6=T 5+ δ ( F 6−FIT 5 ) = 0.73 + 0.3 x (33.46 – 32.98) = 0.873
FIT 6=F 6 +T 6 = 33.46 + 0.874 = 34.33
F 7=F 6+ α ( A6 −FIT 6 ) = 33.46 + 0.3 x (36 – 34.33) = 33.96
T 7=T 6+ δ ( F 7−FIT 6 ) = 0.874 + 0.3 x (33.96 – 34.33) = 0.763
FIT 7=F 7 +T 7 = 33.96 + 0.763 = 34.72
F 8=F 7+ α ( A7 −FIT 7 ) = 33.96 + 0.3 x (38 – 34.72) = 34.94
T 8=T 7+ δ ( F 8−FIT 7 ) = 0.763 + 0.3 x (34.94 – 34.72) = 0.829
FIT 8=F 8 +T 8 = 34.94 + 0.829 = 35.77
F 9=F 8+ α ( A 8−FIT 8 ) = 34.94 + 0.3 x (40 – 35.77) = 36.21
T 9=T 8 +δ ( F 9−FIT 8 ) = 0.829 + 0.3 x (36.21 – 35.77) = 0.961
FIT 9=F 9 +T 9 = 36.21 + 0.961 = 37.17
F 10=F9 + α ( A 9−FIT 9 ) = 36.21 + 0.3 x (40 – 37.17) = 37.06
T 10=T 9+ δ ( F 10−FIT 9 ) = 0.961 + 0.3 x (37.06 – 37.17) = 0.928
FIT 10=F10 + T 10 = 37.06 + 0.928 = 37.99
c)
The mean absolute deviation (MAD)
The demand for the last 10 months
=0.3
=0.3
e t = y t− ^y t
MAE=average(|et|¿
Single Exponential Smoothing Exponential smoothing with trend
Forecast forecast
Mont Actual Ft et FIT t et
h demand
1 31 31.000 0.000 31.000 0.000
2 34 31.000 3.000 30.700 3.300
3 33 31.900 1.100 31.777 1.223
4 35 32.230 2.770 32.018 2.982
5 37 33.061 3.939 32.983 4.017
6 36 34.243 1.757 34.330 1.670
7 38 34.770 3.230 34.719 3.281
8 40 35.739 4.261 35.770 4.230
9 40 37.017 2.983 37.171 2.829
10 41 37.912 3.088 37.986 3.014
MAE 2.613 MAE 2.655
Based on the calculation results, the Single Exponential Smoothing forecasting method gives
higher accuracy than the Exponential Smoothing with Trend method, as shown by the
significantly lower mean absolute deviation (MAD) value (2.613 vs. 2.655). This shows that
incorporating the trend into the forecasting model helps to more closely reflect the increasing
trend of the actual data over the months.