Which of the following statements is TRUE about single exponential smoothing?
A) Large values of alpha (α) place more emphasis on recent data.
B) α values range from 0.6 to 1.
C) Smaller values of smoothing constant have the advantage of quickly adjusting the forecasts when forecasting errors occur.
D) Larger values of smoothing constant do not allow the forecast to react faster to changing conditions.

Question

Quizplus · Accepted Answer

Single exponential smoothing is a time series forecasting method that assigns more weight to recent observations while calculating the forecast. This is controlled by the smoothing constant, α. Larger values of α (usually between 0.1 and 0.3) put more weight on recent observations, whereas smaller values of α give equal weight to all observations. Therefore, statement A is true as it correctly states that larger values of α place more emphasis on recent data.

Which of the Following Statements Is TRUE About Single Exponential