As the smoothing constant, alpha, is reduced:
A)the forecasts are more sensitive to trend influences.
B)the weights given to prior periods' data become more uniform.
C)cyclical/seasonal factors are more easily discernible.
D)the computational complexity of forecasting increases.

Question

Quizplus · Accepted Answer

As the smoothing constant, alpha, is reduced, the weights given to prior periods' data become more uniform, meaning recent observations are not as heavily weighted compared to older data. This makes the forecast less responsive to recent changes.

As the Smoothing Constant, Alpha, Is Reduced