Revenue analysis by applying simple exponential smoothing methods, case of Company Luis 1

Abstract

The purpose of this investigation is to determine the projected income based on the volume of sales of the company Luis 1 S.A. in the Portovelo canton, in which the simple exponential smoothing technique has been used. To achieve this, the methodology known as case study has been used, since it is pertinent to recognize that this event is unique, exclusive and descriptive. In this sense, a mixed approach has been used; that is, qualitative and quantitative that includes two interviews. While, in the quantitative, the mathematical formula was applied, which includes variables such as: real data, forecast data and alpha smoothing constant. In addition, the simple exponential smoothing method (to predict sales revenue) was used, which was described in advance; using different values ​​of alpha in the calculations. This step was fundamental, since it allowed to achieve a third specific objective: to obtain income forecasts for certain periods in the company Luis 1 S.A. Likewise, it is necessary to indicate that three smoothing constant values ​​were used: 0.1, 0.5 and 0.9; with the application in the exponential smoothing formula and these constants compare the actual behaviors against the predicted ones. Ultimately, one of the key takeaways from this case study highlights the importance of applying forecasting methods in management. These methods make it possible to understand the future behavior of variables and make the right decisions to minimize risk and maximize utility.