What is the Holt-Winters Forecasting Algorithm and How Can it be Us...

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TIME SERIES FORECASTING
HOLT WINTERS EXPONENTIAL SMOOTHING
A Simplistic Explainer Series For Citizen Data Scientists
J o u...

Introduction &
Terminologies

Introduction
• The idea of Holt Winters exponential smoothing is to smooth the
original univariate series and to use the s...

Introduction
Holt Winters Algorithms are applied when
data is stationary.
Basically, there are three types of Holt
Winters...

When To Apply Which Holt Winter Method
Algorithm Stationarity?
Univariate/Multivariat
e Dataset?
Level Trend? Seasonal? Cy...

What Is Stationarity?
• Definition : “A stationary time series is one whose statistical properties such as mean, variance ...

What Is Level?
Level : In a time series there might be one or more significant jump, occurring in few successive time poin...

What is Additive & Multiplicative Time Series
• There are two types of seasonality : 'multiplicative' and 'additive'
• In ...

Holt-Winters Single Exponential Smoothing

Introduction with
Example

Holt Winters Single Exponential Smoothing
• The simplest of the Holt Winters exponential smoothing methods is called “Holt...

Example-HWSES
• For example, The Bay City Seafood Company recorded the monthly
cod catch for the previous two years, as gi...

Example-HWSES
• As there is no trend / seasonality but only level
present in data , we should choose holt winters
single e...

Model Accuracy :
Actual Predicted Abs((Actual - predicted)/actual)*100
M10 399 380 4.76
M11 402 399 0.75
M12 375 378 0.80
...

Standard Tuning
Parameters

Standard Tuning Parameters
• Model approach & parameters:
• In Holt Winters, there are two approaches to fitting a model :...

Sample UI for
input/tuning
parameters and output

Sample UI for selecting Inputs and applying tuning
parameters
Select the variables you would
like to Forecast
Date
GDP Val...

Sample UI for output
Output will be forecasted values based on user specified
time period along with line charts showing a...

Limitations

Limitations
• Holt Winters Exponential Smoothing Algorithms are used only when
data series is stationary
• Holt Winters Si...

Business Use case

Use case
• Business problem :
• Forecasting number of viewers by day for a particular game show for next
two months
• Inpu...

Holt-Winters Double
Exponential Smoothing

Introduction with
Example

Holt Winters Double Exponential Smoothing
1. Simple exponential smoothing is not applicable when there is a trend in the d...

Example-HWDES
• Let’s take an example of Thermostat sales recorded weekly as given below :
• The plot of these data sugges...

Example-HWDES
• As there is no seasonality but two levels and upward
trend present in data , we should choose holt winters...

Model Accuracy
• Along with forecasted values, MAPE and prediction accuracy is displayed so user knows how much accurate t...

Standard Tuning
Parameters

Standard tuning parameters
Model approach &
parameters:
In Holt Winters, there are two approaches to fitting a model : Aut...

Sample UI For
Input/Tuning
Parameters And Output

Sample UI for selecting Inputs and applying tuning parameters
Select the variables you would
like to Forecast
Date
Sales
I...

Sample UI for output
Output will be forecasted values based on user specified
time period along with line charts showing a...

Limitations

Limitations
• Holt Winters Double Exponential Smoothing is used for forecasting
data consisting only level and trends . In...

Business use case

Business use case
• Business problem :
• Insurance claim manager wants to forecast policy sales for next month
based on pa...

Holt-Winters Triple Exponential
Smoothing

Introduction with
Examples

Introduction : Holt Winters Triple Exponential
Smoothing
• Single and Double exponential smoothing are not applicable when...

Example : Holt Winters Triple Exponential
Smoothing
• Let’s take an example of year wise sports drink sales observations :...

Example : Holt Winters
Triple Exponential
Smoothing
Find an optimum value of , β and  for
which model gives minimum valu...

Example : Holt Winters Triple Exponential
Smoothing
• Along with forecasted values, MAPE and prediction accuracy is displa...

Standard Tuning
Parameters

Standard tuning parameters
Model approach &
parameters:
In Holt Winters, there are two approaches to fitting a model :
Aut...

Sample UI For
Input/Tuning
Parameters And Output

Sample UI for selecting Inputs and applying tuning
parameters
Select the variables you would
like to Forecast
Year
Sports ...

Sample UI for output
Output will be forecasted values based on user
specified time period along with line charts showing
a...

Limitations

Limitations
1.Holt Winters triple exponential smoothing can not handle irregular
pattern well.
2.Holt winter triple expone...

Business use case

Business use case
• Business problem :
• A power generator company wants to predict the electricity demand
for next two mo...

Want to Learn
More?
Get in touch with us @
support@Smarten.com
And Do Checkout the Learning section
on
Smarten.com
June 20...

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