Using the exponential smoothing model for forecasting,the smoothing constant alpha determines the level of smoothing and:
A)The slope of the growth curve
B)The speed of reaction to differences between forecasts and actual results
C)The intercept on the Y-axis
D)The next forecast error
E)A measure of forecast accuracy

Question

Quizplus · Accepted Answer

The smoothing constant alpha determines the speed of reaction to differences between forecasts and actual results in the exponential smoothing model. In other words, it controls how much weight should be given to the most recent observation versus the previous forecast. A higher alpha value will result in a faster reaction to changes in the data, while a lower alpha value will result in a smoother forecast. Therefore, B is the best choice.

Using the Exponential Smoothing Model for Forecasting,the Smoothing Constant Alpha