If a time series contains substantial irregular movement, the smoothing constant for a single exponential smoothing model that is close to 1.0 will result in forecasts that are not as smoothed out as those that would occur if a smaller smoothing constant was used.

Question

Quizplus · Accepted Answer

A smoothing constant close to 1.0 in a single exponential smoothing model places more weight on the most recent observations, resulting in less smoothing and allowing the forecasts to respond more to recent changes, including irregular movements. A smaller smoothing constant would result in more smoothing by giving more weight to past observations.

If a Time Series Contains Substantial Irregular Movement, the Smoothing