Question

The number of cases of merlot wine sold by the Connor Owen winery in eight years is as follows:

Using an exponential smoothing model with an alpha value of 0.20, estimate the smoothed value calculated as of the end of 2012. Use the average demand for 2005 through 2007 as your initial forecast, and then smooth the forecast forward to 2012.

Short answer

Answer

The smoothed value calculated at the end of 2012 is shown in step 2.

Step-by-step solution

Definition of exponential smoothing model

Exponential smoothing could be a rule of thumb technique for smoothing time series data using the exponential window function.

Explanation

Forecasts have been rounded to integer values, which may result in minor rounding differences. F (4) is calculated as average demand from years 1-3. Later forecasts are based on a simple exponential smoothing model with alpha = .20.