Single Exponential Smoothing Single Exponential Smoothing
z
A weighted moving weighted moving average average
z Weights Weights decline decline exponentially, most exponentially, most recent observation recent observation
weighted weighted most
z The weighting factor is The weighting factor is
α
– Subjectively chosen Subjectively chosen
– Range from 0 to 1 Range from 0 to 1
– Smaller Smaller
α gives more smoothing, larger gives more smoothing, larger
α gives less gives less
smoothing smoothing
z The weight is: The weight is:
– Close to 0 for smoothing out unwanted cyclical and Close to 0 for smoothing out unwanted cyclical and
irregular components irregular components
– Close to 1 for forecasting