Question

Which of the following is a factor in the decision to use exponential smoothing rather than moving-average smoothing to forecast a given time series?

• Forecast horizon.

• Expertise of the forecast manager.

• Amount of data available.

• None of the options are correct.

Answer 1

Option C is right answer. Amount of data available can be a factor. If the forecast is for a short term then we can use exponential forecasting. To use moving average, there should be time series with clear pattern. However, absence in patterns, then exponential smoothing can be a better choice because exponential smoothing gives more weight to recent data over past data. All other options doesnt qualify as a factor to use exponential smoothing.