If a firm produced a product that is experiencing growth in demand, the smoothing constant alpha used in an exponential smoothing forecasting model would tend to be which of the following?
A)Close to zero
B)A very low percentage, less than 10%
C)The more rapid the growth, the higher the percentage
D)The more rapid the growth, the lower the percentage
E)50 % or more

Question

Quizplus · Accepted Answer

The more rapid the growth in demand, the higher the percentage for the smoothing constant alpha should be, to give more weight to recent observations and quickly adapt to changes in the trend.

If a Firm Produced a Product That Is Experiencing Growth