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 (a) 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
Answer: d) 20,400
Solution: .4(21,000) + (1- .4)20,000 = 8400 + (.6 x 20,000) = 8400 + 12,000 = 20,400