smoothing forecast analysis

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					Smoothing Forecast Analysis

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

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

Widgets

150

Baseline Forecast

100

Linear (Baseline)

50

0
1 2 3 4 5 6 7 8 Week 9 10 11 12 13 14 15

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.

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Since 1996, JaxWorks has offered a suite of Free Excel workbooks and spreadsheets, and ass documents, that cover a number of financial, accounting and sales functions. These are invalua
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spreadsheets, and associated MS Word, PDF and HTML ons. These are invaluable small business tools.

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