Smoothing Forecast Analysis

Smoothing Forecast Analysis Week Widgets Smoothed No. Sold Forecast 1 40 #N/A 2 90 40.00 3 100 75.00 4 110 92.50 5 90 104.75 6 120 94.43 7 109 112.33 8 96 110.00 9 80 100.20 10 120 86.06 11 130 109.82 12 200 123.95 13 190 177.18 14 180 186.16 15 200 181.85 Forecast For Week 16 194.55 © Copyright, 2005-2006, Jaxworks, All Rights Reserved. 0 50 100 150 200 250 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Week Widgets Baseline Forecast Linear (Baseline) 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. This sheet is fully functional. To remove protection click Tools /Protection /Unprotect sheet.