Question

1: Please select the right statement(s) that apply to the exponential smoothing with trend adjustment forecasting method

Select one or more:

a. The exponential smoothing with trend adjustment requires the initial forecast

b. The use of exponential smoothing with trend adjustment is appropriate when the underlying average of the time series is either increasing or decreasing

c. α and β should be carefully selected between 0 and 1 in a way to minimize the forecasting errors

d. Setting α close 1 and β close to 0 means that the past has been completely discounted when predicting the future

e. α and β represent the relative importance of the most recent observation in the forecasting the immediate next period

Answer 1

a. The exponential smoothing with trend adjustment requires the initial forecast

Ft​=αAt-1​+(1−α)(Ft-1​+Tt-1​)

c. α and β should be carefully selected between 0 and 1 in a way to minimize the forecasting errors

Forecasting error minimize means forecast should be close to actual number.

e. α and β represent the relative importance of the most recent observation in the forecasting the immediate next period

Larger α means if are giving more importance to most recent observation.

Please revert back in case of any doubt.

Please upvote. Thanks in advance.