A parameter of the exponential smoothing model that provides the weight given to the most recent time series value in the calculation of the forecast value is known as the _____.
A) mean square error
B) mean absolute deviation
C) smoothing constant
D) None of the answers is correct.

Question

Quizplus · Accepted Answer

The smoothing constant, also known as the smoothing parameter or alpha value, determines the weight given to the most recent observation in the calculation of the forecast value in exponential smoothing. It is a value between 0 and 1, where a higher value gives more weight to the most recent observation and a lower value gives more weight to past observations. Mean square error and mean absolute deviation are measures of forecast accuracy and are not related to the smoothing parameter.

A Parameter of the Exponential Smoothing Model That Provides the Weight