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Simple Exponential Smoothing Lesson #3 Simple Exponential Smoothing  Method Copyright 2010 DeepThought, Inc. 1
Simple Exponential Smoothing Model Introduction ,[object Object]
Estimates a smoothing equation
Uses the estimated smoothing equation to forecast future values
Method format:
F(t+1) = a × X(t) + (1-a) × F(t)Copyright 2010 DeepThought, Inc. 2
Simple Exponential Smoothing Model Details ,[object Object]
Fits a smoothing equation to data
Estimating a smoothing equation which minimizes the errors between actual data points and model estimates
When to use method
Data has no trend or seasonality
Data is stationary
When not to use
Data exhibits pattern such as trend, seasonality, cyclicalityCopyright 2010 DeepThought, Inc. 3
Simple Exponential Smoothing Forecasting Steps Set an objective Build model Evaluate model Use model Copyright 2010 DeepThought, Inc. 4

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