Question

The exponential smoothing forecasting technique slowly responds to changes in the mean level of demand when A. a small alpha value is used. B. a large alpha value is used. C. an alpha value of 1.0 is used. D. size of the alpha value does not affect the responsiveness.

Answer 1

Answer:

a small alpha value is used.

Explanation:

The exponential smoothing forecasting technique is used for forecasting a time series when there is no trend or seasonal pattern, but the mean of the time series is slowly changing over time.

The choice of the smoothing constant α (alpha) is important in determining the operating characteristics of exponential smoothing. The smaller the value of α (alpha), the slower the response. Therefore when a small alpha value is used the exponential smoothing forecasting technique slowly responds to changes in the mean level of demand.

When the values of α (alpha) are larger this makes the smoothed value to react quickly – not only to real changes but also random fluctuations.