Selecting a small value for the smoothing constant ( $\alpha$ )in exponential smoothing results in
A) more importance being placed on the exponentially smoothed value from the previous period.
B) more importance being placed on the actual y value for the current time period.
C) a more accurate forecast.
D) a less accurate forecast.

Question

Quizplus · Accepted Answer

Selecting a small value for the smoothing constant ($\alpha$) in exponential smoothing results in more importance being placed on the exponentially smoothed value from the previous period. This is because a small value of $\alpha$ will give more weight to historical data, resulting in a smoother and slower response to changes in the actual values. However, this can result in a less accurate forecast as the model may not be able to adjust to sudden changes or trends in the data. Therefore, choosing the appropriate value for $\alpha$ is important to balance between accuracy and responsiveness to changes in the data.

Selecting a Small Value for the Smoothing Constant α\alphaα )In Exponential Smoothing Results in A) More Importance Being Placed

Selecting a Small Value for the Smoothing Constant $\alpha$ )In Exponential Smoothing Results in
A) More Importance Being Placed