Exponential smoothing uses a feedback control mechanism because ________.
A) α is less than 1
B) calculations are based on modifying the previous smooth value
C) the calculation contains the forecast error
D) the weights given to past data are exponentially distributed

Question

Exponential smoothing uses a feedback control mechanism because ________.
A) α is less than 1
B) calculations are based on modifying the previous smooth value
C) the calculation contains the forecast error
D) the weights given to past data are exponentially distributed

Quizplus · Accepted Answer

Exponential smoothing uses a feedback control mechanism by incorporating the forecast error of the previous period into the calculation of the current period's forecast. This allows the model to adjust its forecast as new data becomes available, making it a powerful and flexible forecasting tool. The calculation of exponential smoothing involves a smoothing parameter (α) that controls the weight given to past data, but this does not necessarily use a feedback control mechanism. The weights given to past data in exponential smoothing are indeed exponentially distributed, but this is not the reason why it uses a feedback control mechanism.

Exponential Smoothing Uses a Feedback Control Mechanism Because ________