Question

In an exponential smoothing model when a=1, the forecasted amount equals to:

options

previous forecasted amount

previous periods actual amount

current period actual amount

the average of actual amount and forecasted amount of previous period

Answer 1

Using the exponential smoothiing the forecasting is calculated as:

Since given that a(Alpha) = 1 the the forecasted value will be equal to the previous period actual amount.

because Ft  = a* At-1  + (1-a)Ft-1

as a = 1, then

Ft  = 1* At-1  + (1-1)Ft-1

Ft  = At-1

Thus, the ans is  previous periods actual amount