In picking the smoothing constant for an exponential smoothing model, we should look for a value that
A)produces a nice-looking curve.
B)equals the utility level that matches with our degree of risk aversion.
C)produces values which compare well with actual values based on a standard measure of error.
D)causes the least computational effort.

Question

Quizplus · Accepted Answer

The best choice for picking the smoothing constant for an exponential smoothing model is the value that produces values which compare well with actual values based on a standard measure of error. This ensures that the model is accurately forecasting future values based on past trends. Option A is subjective and does not necessarily indicate accuracy. Option B might not apply to all situations and is not a standard method of selecting the smoothing constant. Option D is not a relevant concern when selecting the smoothing constant.

In Picking the Smoothing Constant for an Exponential Smoothing Model