Exponential Smoothing

What is Exponential Smoothing?
Exponential Smoothing Forecaset with a = .3

h2. What is Exponential Smoothing?

• A type of weighted moving averaging model
• Part of many forecasting packages; ideal for developing forecasts of lots of smaller items

• Needs only three numbers:

Ft-1 = Forecast for the period before

current time period t

At-1 = Actual demand for the period

before current time period t

a = Weight between 0 and 1

• Formula

• As a gets closer to 1, the more weight put on the most recent demand number

h2. Exponential Smoothing Forecaset with a = .3