Suppose That Sally's Company Uses Exponential Smoothing to Make Forecasts

question 25

Multiple Choice

Suppose that Sally's company uses exponential smoothing to make forecasts. Further suppose that last period's demand forecast was for 20,000 units and last period's actual demand was 21,000 units. Sally's company uses a smoothing constant (?) equal to 40%. What should be the forecast for this period?

• A) 20,000
• B) 21,000
• C) 20,600
• D) 20,400
• E) 19,600

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Definitions:

Accounting Equation

The fundamental principle of accounting that states Assets = Liabilities + Equity, ensuring that a company's financial statements are balanced.

Purchase Supplies

The act of acquiring materials and consumable items required for the production process or office use.

Assets

Resources owned by a company that are expected to provide future economic benefits.

Investing Activity

Financial activities related to acquiring or disposing of non-current assets, such as property, plant, and equipment, which are recorded on a company's cash flow statement.