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Exponential Smoothing Examples

New forecast = Old forecast + smoothing factor (

(actual demand - old forecast)

Example:  old forecast= 160, actual = 200, = 0.1

     new forecast= 160 + (0.1 (200 - 160))

= 160 + (0.1 40) = 164

Example:  old forecast= 160, actual = 200, = 0.8

     new forecast= 160 + (0.8 (200 - 160))

= 160 + (0.8 40) = 192

Adapted from:  Manufacturing for Survival, B.R. Williams, Addison Wesley, 1996

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