Exponential Smoothing_short

Exponential Smoothing_short - Exponential Smoothing Simple...

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Exponential Smoothing Simple Exponential smoothing is a technique that can be applied to time series data, either to produce smoothed data for presentation, or to make forecasts. The time series data themselves are a sequence of observations. The observed phenomenon may be an essentially random process , or it may be an orderly, but noisy , process. Whereas in the simple moving average the past observations are weighted equally, exponential smoothing assigns exponentially decreasing weights over time. The simplest form of exponential smoothing is given by the formula: By direct substitution of the defining equation for simple exponential smoothing back into itself we find that Double exponential smoothing Simple exponential smoothing does not do well when there is a trend in the data. In such situations, several methods were devised under the name "double exponential smoothing" or "second-order exponential smoothing." The basic idea behind double exponential smoothing is to introduce a term to take into account the possibility of a series exhibiting some form of trend. This slope
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