Wayne Rexburg,a marketing analyst for Bosco Incorporated,uses exponential smoothing techniques to forecast sales.If Wayne decides to increase the smoothing constant from 0.4 to 0.8,he is:
A)Decreasing the influence of sales in recent periods in the forecast,while increasing the influence of sales in earlier periods in the forecast.
B)Doubling the influence of forecasted sales in time t.
C)Increasing the influence of sales in recent periods in the forecast,while decreasing the influence of sales in earlier periods.
D)Damaging the integrity of the forecast because the smoothing constant should remain the same;its value is not arbitrary.
E)Enhancing the validity of the forecast because the influence of sales in recent periods - the most relevant periods - is increased while the influence of sales in past periods is decreased.

Question

Quizplus · Accepted Answer

Increasing the smoothing constant from 0.4 to 0.8 leads to a greater weight being placed on sales in recent periods and a reduced weight being placed on sales in earlier periods in the forecast. Therefore, the option C is correct. Option A is incorrect because it wrongly mentions "increasing the influence of sales in earlier periods." Option B is incorrect because doubling the influence of forecasted sales is not feasible by merely changing the smoothing constant. Option D is incorrect because changing the smoothing constant is a legitimate approach to adjusting a forecast. Option E is incorrect because it misrepresents the impact of increasing the smoothing constant as positive, whereas it may or may not enhance the forecast accuracy depending on the data characteristics.

Wayne Rexburg,a Marketing Analyst for Bosco Incorporated,uses Exponential Smoothing Techniques