Using the same data and exponential smoothing technique, produce Forecast A with $\alpha=0.1$ and Forecast B with $\alpha=0.4$
A) forecast A will be more responsive than Forecast $B$
B) forecast $A$ will be less responsive than Forecast $B$
C) forecast A will have the same level of responsiveness as Forecast B
D) none of the above

Question

Quizplus · Accepted Answer

Forecast B, with $\alpha=0.4$, will be more responsive to changes in the data than Forecast A with $\alpha=0.1$, because a higher $\alpha$ value gives more weight to the most recent observations.

Using the Same Data and Exponential Smoothing Technique, Produce Forecast α=0.1\alpha=0.1α=0.1

Using the Same Data and Exponential Smoothing Technique, Produce Forecast $\alpha=0.1$