In exponential smoothing, which of the following values for $\alpha$ would generate the most stable forecast?
A) 0.10
B) 0.25
C) 0.50
D) 0.75
E) 1.00

Question

Quizplus · Accepted Answer

A lower value of alpha (such as 0.10) would generate a more stable forecast as it would place more weight on past data and less on recent observations. This smoothing approach would result in less volatility and a smoother forecast. Higher values of alpha (such as 0.75 or 1.00) would place more weight on recent observations and result in a more volatile forecast.

In Exponential Smoothing, Which of the Following Values For α\alphaα Would Generate the Most Stable Forecast? A) 0

In Exponential Smoothing, Which of the Following Values For $\alpha$ Would Generate the Most Stable Forecast?
A) 0