In the exponential smoothing formula for updating the level of the series, ,what does α represent?
A)The weighted average of the exponentially declining weights.
B)The speed of decline in the weights of older observations.
C)The initial value of the time series.
D)The last value of the time series.

Question

In the exponential smoothing formula for updating the level of the series,  ,what does α represent?
A)The weighted average of the exponentially declining weights. 
B)The speed of decline in the weights of older observations. 
C)The initial value of the time series. 
D)The last value of the time series.

Quizplus · Accepted Answer

α represents the speed of decline in the weights of older observations. It is a parameter that determines the weight given to the current observation compared to the previous observations. A higher value of α gives more weight to the current observation, resulting in a more rapid response to changes in the time series, while a lower value of α gives more weight to the previous observations, resulting in a smoother forecast.

In the Exponential Smoothing Formula for Updating the Level of the Series