Which of the following statements is TRUE about exponential smoothing technique?
A) It uses a weighted average of past time-series values.
B) It includes seasonal effects.
C) It has the typical values of alpha in the range of 0.6 to 0.9.
D) It will not overshoot the actual values if a negative trend exists.

Question

Quizplus · Accepted Answer

Exponential smoothing technique is a forecasting method that uses a weighted average of past time-series values. The weights decrease exponentially as the observations get older. It does not include seasonal effects and the typical values of alpha can range from 0.1 to 0.9. If a negative trend exists, the technique may still overshoot the actual values.

Which of the Following Statements Is TRUE About Exponential Smoothing