Exponential Smoothing

Knowledge Center

• About
• Home
• Dictionary
• Encyclopedia
• Question?
• Views

• Register
• Log in
• Help

• Change & Organization
• Communication & Skills
• Decision-making & Valuation
• Ethics & Responsibility
• Finance & Investing
• HRM
• Knowledge & Intangibles
• Leadership
• Marketing
• Program & Project
• Strategy
• Supply Chain & Quality

Large Scale Statistical Forecasting. Explanation of Exponential Smoothing.

Nobody can really look into the future. However modern statistical methods, econometric models and Business Intelligence software can indeed to some extent help companies forecast and estimate what is going to happen in the future.

The Exponential Smoothing model

The Exponential Smoothing (ESM) model uses a weighted average of past and current values, adjusting weight on current values to account for the effects of swings in the data, such as seasonality. Using an alpha term (between 0-1), you can adjust the sensitivity of the smoothing effects. ESM is often used on Large Scale Statistical Forecasting problems, because it is both robust and easy to apply.

ESM is a popular scheme to create a smoothed Time Series. Whereas in Single Moving Averages the past observations are weighted equally, Exponential Smoothing assigns exponentially decreasing weights if the observation gets older. In other words: recent observations are given more weight in forecasting than the older observations.

In the case of moving averages, the weights assigned to the observations are the same and are equal to 1/N. In Exponential Smoothing, however, there are one or more smoothing parameters which must be determined or estimated. These choices determine the weights assigned to the observations.

Exponential Smoothing Forum Begin a new topic

Exponential Smoothing Special Interest Group Special Interest Group

Exponential Smoothing Education & Events Find Trainings, Seminars and Events

Best Practices - Exponential Smoothing Premium

Expert Tips - Exponential Smoothing Premium

Resources - Exponential Smoothing Premium 4 Exponential Smoothing Method Variants This presentation gives a detailed outline of various exponential smoothing methods. After an introduction into Exponential Smoothing the following me... Usage (application): When to use What Formula? Examples. PROs and CONs.     News Exponential Smoothing         News Statistical Analysis         Videos Exponential Smoothing         Videos Statistical Analysis         Presentations Exponential Smoothing         Presentations Statistical Analysis         More Exponential Smoothing         More Statistical Analysis

Compare also: Regression Analysis  |  Dynamic Regression  |  ARIMA  |  Operations Research  |  Game Theory  |  Business Intelligence  |  Analytical CRM

Return to Management Hub: Finance & Investing  |  Marketing

More Management Methods, Models and Theory