Exhibit 11.8
The following questions use the data below.
Joe's Sporting Goods wants to forecast quarterly sales figures using Winter's method. The store has collected 12 quarters of data and needs your help to analyze the data.
-Refer to Exhibit 11.8. What formula should be entered in cell F7 to compute the Trend value for year 2 Quarter 1?
A) =$D$18*(E6-E7)+(1-$D$18)*F6
B) =$D$18*(E7-E6)+$D$18*F6
C) =$D$18*(E7-E6)+(1-$D$18)*F6
D) =$D$18*(E7-E6)*(1-$D$18)

Question

Exhibit 11.8
The following questions use the data below.
Joe's Sporting Goods wants to forecast quarterly sales figures using Winter's method. The store has collected 12 quarters of data and needs your help to analyze the data. 
-Refer to Exhibit 11.8. What formula should be entered in cell F7 to compute the Trend value for year 2 Quarter 1?
A) =$D$18*(E6-E7)+(1-$D$18)*F6 
B) =$D$18*(E7-E6)+$D$18*F6 
C) =$D$18*(E7-E6)+(1-$D$18)*F6 
D) =$D$18*(E7-E6)*(1-$D$18)

Quizplus · Accepted Answer

According to Winter's method, the Trend value for year 2 Quarter 1 can be calculated using the formula:
Trend = α*(Actual Q1 - Actual Q2) + (1-α)*Trend Q1
Where, 
α = Smoothing Constant = 0.2 (Given in cell D18)
Actual Q1 for year 2 = E7
Actual Q2 for year 2 = E6
Trend Q1 for year 2 = F6
Therefore, substituting the values in the formula, we get:
Trend = 0.2*(E7-E6) + 0.8*F6
Which is equivalent to option C.

Exhibit 11.8 The Following Questions Use the Data Below