The smoothing constant,α,in the exponential smoothing forecast
A)must always be a value greater than 1.0.
B)must always be a value less than 0.10.
C)must be a value between 0.0 and 1.0.
D)should be equal to the time frame for the forecast.

Question

Quizplus · Accepted Answer

The smoothing constant, α, must be a value between 0.0 and 1.0 because it represents the weight that is given to the most recent data point in the forecast. A value of 0.0 means that only historical data is used in the forecast, while a value of 1.0 means that only the most recent data point is used. A value between 0.0 and 1.0 allows for a balance between historical data and recent data in the forecast. Choices A, B, and D are incorrect because they do not follow this requirement for the smoothing constant.

The Smoothing Constant,α,in the Exponential Smoothing Forecast