A university registrar has adopted a simple exponential smoothing model ( a = 0.4) to forecast enrollments during the three regular terms (excluding summer). The results are shown in Table 5.16

(a) Use the data to develop an enrollment forecast for the third quarter of year 2.

(b) What would be the effect of increasing the smoothing constant to 1.0?

Table 5.16 Year Quarter Actual Old Forecast New Enrollment Forecast Error Correction Forecast

(000) (000) (000) (000) (000)

1 1st 20.50 20.00 0.5 0.20 20.20 2nd 21.00 3rd 19.12 2 1st 20.06 2nd 22.00 3rd

[Ans.

(a) 20,800,

(b) Forecast would reflect the total amount of variation of previous demand from previous forecast—therefore, no smoothing.]