CPIM Practice Exam

What is the exponential smoothing forecast for July if the forecast for June was 125 units and 140 were sold, with an alpha of 0.2?

1. 53 units

2. 128 units

3. 130 units

4. 137 units

The correct answer is: 128 units

To calculate the exponential smoothing forecast for July, you need to apply the formula for exponential smoothing: \[ \text{Forecast}_{\text{next}} = \alpha \times \text{Actual}_{\text{current}} + (1 - \alpha) \times \text{Forecast}_{\text{current}} \] In this case, the forecast for June is 125 units, the actual sales for June are 140 units, and the smoothing constant (alpha) is 0.2. Plugging these values into the formula: 1. Calculate the contribution of the actual sales: \[ \alpha \times \text{Actual}_{\text{current}} = 0.2 \times 140 = 28 \] 2. Calculate the contribution of the current forecast: \[ (1 - \alpha) \times \text{Forecast}_{\text{current}} = 0.8 \times 125 = 100 \] 3. Now, combine both contributions: \[ \text{Forecast}_{\text{next}} = 28 + 100 = 128 \] Thus, the exponential smoothing forecast for July