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  • Time Series Forecasting Exercise: Simple Exponential Smoothing

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    Pravin K Yadav
    9 views5 pages
    This document describes using simple exponential smoothing to forecast time series sales data. It shows the sales data over 10 periods and calculates the forecast using simple exponential smoothing with different alpha values. It uses the Excel Solver tool to find the optimal alpha value that minimizes the mean absolute deviation (MAD) error between actual and forecast sales. The optimal alpha is found to be 0.80094331, resulting in a minimum MAD of 9.08.

    Original Description:

    Forecasting template using Exponential Smoothing.

    Original Title

    Exp Smooth

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    This document describes using simple exponential smoothing to forecast time series sales data. It shows the sales data over 10 periods and calculates the forecast using simple exponential smoothing with different alpha values. It uses the Excel Solver tool to find the optimal alpha value that minimizes the mean absolute deviation (MAD) error between actual and forecast sales. The optimal alpha is found to be 0.80094331, resulting in a minimum MAD of 9.08.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xls, pdf, or txt
    9 views5 pages

    Time Series Forecasting Exercise: Simple Exponential Smoothing

    Uploaded by

    Pravin K Yadav
    This document describes using simple exponential smoothing to forecast time series sales data. It shows the sales data over 10 periods and calculates the forecast using simple exponential smoothing with different alpha values. It uses the Excel Solver tool to find the optimal alpha value that minimizes the mean absolute deviation (MAD) error between actual and forecast sales. The optimal alpha is found to be 0.80094331, resulting in a minimum MAD of 9.08.

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xls, pdf, or txt
    of 5

    Time Series Forecasting Exercise

    Simple Exponential Smoothing


    alpha=

    Period
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10

    Sales
    99
    88
    50
    58
    62
    60
    55
    62
    71
    65

    Simple
    Exponential
    Smoothing
    N/A
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0

    Error Abs. Error


    -11.0
    -49.0
    -41.0
    -37.0
    -39.0
    -44.0
    -37.0
    -28.0
    -34.0
    -35.56
    BIAS

    11.0
    49.0
    41.0
    37.0
    39.0
    44.0
    37.0
    28.0
    34.0
    35.56
    MAD

    Objective is to minimize
    the error. In this case
    MAD
    Standard Error (Square Root of MSE) =

    Select a value of alpha


    that will minimize MAD

    Percent
    Error

    Squared
    Error

    12.50%
    98.00%
    70.69%
    59.68%
    65.00%
    80.00%
    59.68%
    39.44%
    52.31%
    59.70%
    MAPE

    121.0
    2401.0
    1681.0
    1369.0
    1521.0
    1936.0
    1369.0
    784.0
    1156.0
    1370.89
    MSE
    37.0

    Time Series Forecasting Exercise

    Select Tools - Solver

    Simple Exponential Smoothing


    alpha=

    Period
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10

    Sales
    99
    88
    50
    58
    62
    60
    55
    62
    71
    65

    Simple
    Exponential
    Smoothing
    N/A
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0
    99.0

    Error Abs. Error


    -11.0
    -49.0
    -41.0
    -37.0
    -39.0
    -44.0
    -37.0
    -28.0
    -34.0
    -35.56
    BIAS

    11.0
    49.0
    41.0
    37.0
    39.0
    44.0
    37.0
    28.0
    34.0
    35.56
    MAD

    Objective is to minimize
    the error. In this case
    MAD
    Standard Error (Square Root of MSE) =

    Percent
    Error

    Squared
    Error

    12.50%
    98.00%
    70.69%
    59.68%
    65.00%
    80.00%
    59.68%
    39.44%
    52.31%
    59.70%
    MAPE

    121.0
    2401.0
    1681.0
    1369.0
    1521.0
    1936.0
    1369.0
    784.0
    1156.0
    1370.89
    MSE
    37.0

    Set the target cell equal to the


    value of MAD (cell E19) and sele
    minimize. Set the By Changing
    Cells equal to alpha (cell E4)

    Set the target cell equal to the


    value of MAD (cell E19) and select
    minimize. Set the By Changing
    Cells equal to alpha (cell E4)

    Time Series Forecasting Exercise


    Simple Exponential Smoothing

    Optimal value of alpha

    alpha= 0.80094331

    Period
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10

    Sales
    99
    88
    50
    58
    62
    60
    55
    62
    71
    65

    Simple
    Exponential
    Smoothing
    N/A
    99.0
    90.2
    58.0
    58.0
    61.2
    60.2
    56.0
    60.8
    69.0

    Minimum value of MAD

    Error Abs. Error

    Percent
    Error

    Squared
    Error

    -11.0
    -40.2
    0.0
    4.0
    -1.2
    -5.2
    6.0
    10.2
    -4.0
    -4.61
    BIAS

    12.50%
    80.38%
    0.00%
    6.45%
    2.01%
    9.53%
    9.61%
    14.35%
    6.11%
    15.66%
    MAPE

    121.0
    1615.2
    0.0
    16.0
    1.4
    27.5
    35.5
    103.8
    15.8
    215.13
    MSE

    11.0
    40.2
    0.0
    4.0
    1.2
    5.2
    6.0
    10.2
    4.0
    9.08
    MAD

    Standard Error (Square Root of MSE) =

    14.7

    After Solver finds a solution


    select OK to keep the solution.
    Note the value in E4 = 0.8009433
    and the MAD = 9.08. This is the
    minimum error for this time serie
    forecast.

    After Solver finds a solution


    select OK to keep the solution.
    Note the value in E4 = 0.8009433
    and the MAD = 9.08. This is the
    minimum error for this time series
    forecast.

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