While developing a forecast of sales for 1979-80, ABC Company managers felt that events in the recent past had a much higher similarity to the expected future conditions than those in the more distant past.Assuming that this premise is correct, exponential smoothing would provide a better forecast than a simple moving average.

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Exponential smoothing gives more weight to the most recent data points, making it better suited for forecasting in situations where more recent data is more relevant than older data. In this scenario, where recent events have a higher similarity to expected future conditions, exponential smoothing would be a better method of forecasting than a simple moving average.

While Developing a Forecast of Sales for 1979-80, ABC Company