If a firm produced a product that was experiencing growth in demand,the smoothing constant alpha (reaction rate to differences)used in an exponential smoothing forecasting model would tend to be which of the following?
A)Close to zero
B)A very low percentage,less than 10%
C)The more rapid the growth,the higher the percentage
D)The more rapid the growth,the lower the percentage
E)50% or more

Question

Quizplus · Accepted Answer

A higher alpha is used to give more weight to recent observations, which is useful when demand is rapidly changing or growing.

If a Firm Produced a Product That Was Experiencing Growth