In the exponential smoothing (ES) technique, the value of alpha, the smoothing constant:
A)may assume any non-negative value.
B)determines the forecasting model's responsiveness to abrupt changes.
C)typically is at the higher end in the range of possible values.
D)is preset by the analyst and not subject to validity testing.

Question

Quizplus · Accepted Answer

The value of alpha in exponential smoothing determines the forecasting model's responsiveness to abrupt changes, making choice B the correct answer. Choice A is incorrect because alpha typically ranges from 0 to 1, meaning that only non-negative values are allowed. Choice C is incorrect because the optimal value of alpha depends on the data and is often found to be in the middle of the range of possible values. Finally, choice D is incorrect because the value of alpha should be chosen through a process of validation and testing, rather than being preset by the analyst.

In the Exponential Smoothing (ES) Technique, the Value of Alpha