How do you initialize the first forecast when there is no previous period?

Because the recursive formula needs a previous forecast, the video demonstrates a simple initialization method: set the first forecast equal to the first actual observation. In the example this gives

F(1)=A(1)=1103

Conditions

Applies when no earlier forecast is available.
Shown specifically for Week 1 in the example.

Reasoning, step by step

Identify that the recurrence relation requires $F(t-1)$ .
Recognize that for the first period ( $t=1$ ), $F(0)$ does not exist.
Apply the initialization rule: set $F(1)$ equal to the actual value $A(1)$ .
Enter this value into the forecast column to serve as the seed for subsequent calculations.

Example

The speaker says that if we do not have a previous week to come up with a forecast, we just simply use the actual from that week as our forecast. Cell C4 is filled with 1103, matching the Week 1 actual sales value in B4.

Common misconceptions

Trying to apply the recurrence formula at the first period even though $F(t-1)$ does not exist yet.
Assuming the first forecast must be an average of all past data, which is not available.

Watch the explanation

YouTubeSimple Explanation of Exponential Smoothing Forecast Method

1:21 – 1:36Watch this moment ↗

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Answers are generated from source material and independently checked. Consult the original video or creator if something is unclear.