Smoothing Forecast Analysis

Smoothed
Forecast
#N/A
40.00
75.00
92.50
104.75
94.43
112.33
110.00
100.20
86.06
109.82
123.95
177.18
186.16
181.85
194.55

250

200

150
Widge ts

Week
Widgets
No.
Sold
1
40
2
90
3
100
4
110
5
90
6
120
7
109
8
96
9
80
10
120
11
130
12
200
13
190
14
180
15
200
Forecast For Week 16

Baseline
Linear (Baseline)
Forecast

100

50

0
1

10 11 12 13 14 15

Week

The fundamental idea behind smoothing is that each new forecast is obtained in part by moving the prior forecast in a
direction that would have improved the old forecast. The equation is: F[t+1] = F[t] + a x e[t] where:
1. t is the time period
2. F[t] is the forecast at time t, and F[t+1] is the forecast at the time period immediately following time t
3. a is the smoothing constant (Never exceed .7)
4. e[t] is the error: the difference between the forecast for time t and the actual observation at time t
How do you use it? Enter your business units (widgets) and this sheet will forecast unit sales for you.
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