The exponential smoothing provides an idea that the most recent observations usually give the best guide to the future, therefore we want a weighting scheme with decreasing weights for older observations. The choice of the smoothing constant is important in determining the operating
characteristics of exponential smoothing. The smaller the value of a, the slower the response. Larger values of a cause the smoothed value to react quickly – not only to real changes but also random fluctuations [11]. Simple exponential smoothing model is only good for non-seasonal patterns with approximately zero trend and for short-term forecasting because if we extend past the next period, the forecasted value for that period has to be used as a surrogate for the actual demand for any forecast past the next period. Consequently, there is no ability to add corrective information (the actual demand) and any error grows exponentially.