# Techniques of Forecasting

Topics: Exponential smoothing, Forecasting, Moving average Pages: 7 (1229 words) Published: March 4, 2013
An Assignment
On
Forecasting

Submitted To
Dr. Tophan Patra

Submitted By
Kumail Murtaza
MBA AVM SEM III
R250211021

College of Management and Economic Studies (CMES)
University of Petroleum and Energy Studies

Exponential Smoothing
Class Values

Ft+1 = α.Xt + (1- α).Ft ----------------------------------- Eqn 1
Ft+1----- Forecasted Value of the next period “t+1”
α------- Smoothing Factor/Coefficient
Xt------- Actual Value of the current period “t”
Ft------- Forecasted Value of the current period “t”

Table 1
α=0.2
Months| Actual Values| Forecasted Values| Forecast Error| Jan| 66.1| -| -|
Feb| 66.1| 66.1| 0|
Mar| 66.4| 66.1| 0.3|
Apr| 64.3| 66.16| -1.86|
May| 63.2| 65.788| -2.588|
Jun| 61.6| 65.2704| -3.6704|
Jul| 59.3| 64.53632| -5.23632|
Aug| 58.1| 63.489056| -5.389056|
Sep| 58.9| 62.4112448| -3.5112448|
Oct| 60.9| 61.70899584| -0.80899584|
Nov| 60.7| 61.54719667| -0.847196672|
Dec| 59.4| 61.37775734| -1.977757338|

Sample Calculation for the Month of May at α=0.2, t=April
α = 0.2
Xt = 64.3
Ft = 66.16
Substituting these values in Eqn 1,
Ft+1 = α.Xt + (1- α).Ft
Ft+1 = (0.2 * 64.3) + (1 - 0.2) * 66.16
Ft+1 = 65.788

Forecast Error = Actual Value – Forecasted Value
Forecast Error = 63.2 - 65.788
Forecast Error = -2.588

Table 2
α=0.5
Months| Actual Values| Forecasted Values| Forecast Error| Jan| 66.1| -| -|
Feb| 66.1| 66.1| 0|
Mar| 66.4| 66.1| 0.3|
Apr| 64.3| 66.25| -1.95|
May| 63.2| 65.275| -2.075|
Jun| 61.6| 64.2375| -2.6375|
Jul| 59.3| 62.91875| -3.61875|
Aug| 58.1| 61.109375| -3.009375|
Sep| 58.9| 59.6046875| -0.7046875|
Oct| 60.9| 59.25234375| 1.64765625|
Nov| 60.7| 60.07617188| 0.623828125|
Dec| 59.4| 60.38808594| -0.988085938|

Sample Calculation for the Month of September at α=0.5, t=August
α = 0.5
Xt = 58.1
Ft = 61.109375
Substituting these values in Eqn 1,
Ft+1 = α.Xt + (1- α).Ft
Ft+1 = (0.5 * 58.1) + (1 - 0.5) * 61.109
Ft+1 = 59.60
Forecast Error = Actual Value – Forecasted Value
Forecast Error = 58.9 – 59.60
Forecast Error = -0.7
Table 3
α=0.8
Months| Actual Values| Forecasted Values| Forecast Error| Jan| 66.1| -| -|
Feb| 66.1| 66.1| 0|
Mar| 66.4| 66.1| 0.3|
Apr| 64.3| 66.34| -2.04|
May| 63.2| 64.708| -1.508|
Jun| 61.6| 63.5016| -1.9016|
Jul| 59.3| 61.98032| -2.68032|
Aug| 58.1| 59.836064| -1.736064|
Sep| 58.9| 58.4472128| 0.4527872|
Oct| 60.9| 58.80944256| 2.09055744|
Nov| 60.7| 60.48188851| 0.218111488|
Dec| 59.4| 60.6563777| -1.256377702|

Sample Calculation for the Month of November at α=0.8, t=October
α = 0.8
Xt = 60.9
Ft = 58.809
Substituting these values in Eqn 1,
Ft+1 = α.Xt + (1- α).Ft
Ft+1 = (0.8 * 60.9) + (1 - 0.8) * 58.809
Ft+1 = 60.481

Forecast Error = Actual Value – Forecasted Value
Forecast Error = 60.7 - 60.481
Forecast Error = -0.219

Exponential Smoothing
Assignment Values

Ft+1 = α.Xt + (1- α).Ft ----------------------------------- Eqn 1
Ft+1----- Forecasted Value of the next period “t+1”
α------- Smoothing Factor/Coefficient
Xt------- Actual Value of the current period “t”
Ft------- Forecasted Value of the current period “t”

Table 1
α=0.1

Year| Quarters| Actual Value| Forecasted Value| Forecast Error| 1996| 1| 500| -| -|
| 2| 350| 500| -150|
| 3| 250| 485| -235|
| 4| 400| 461.5| -61.5|
1997| 5| 450| 455.35| -5.35|
| 6| 350| 454.815| -104.815|
| 7| 200| 444.3335| -244.3335|
| 8| 300| 419.90015| -119.90015|
1998| 9| 350| 407.910135| -57.910135|
| 10| 200| 402.1191215| -202.1191215|
| 11| 150| 381.9072094| -231.9072094|
| 12| 400| 358.7164884| 41.28351158|
1999| 13| 550| 362.8448396|...