Question

Which of the following smoothing constants would make an exponential smoothing forecast equivalent to a naive forecast? a. 1.0 b.0.0 c.one equal to the MAD d.0.5 e.This question can not be answered given only the above information.

Answer 1

The smoothing constant α determines the weight given to the actual value and the previous forecast in exponential smoothing. To make the exponential smoothing forecast equivalent to a naive forecast, the smoothing constant α should be set to 0.0.

Step-by-step explanation:

The exponential smoothing forecast can be represented by the formula:\

Ft+1 = αAt + (1-α)Ft

where Ft+1 is the forecast for the next period, At is the actual value for the current period, and Ft is the forecast for the current period.

The smoothing constant α determines the weight given to the actual value and the previous forecast.

If we want the exponential smoothing forecast to be equivalent to a naive forecast, we need to set α to 0.0.

This means the forecast will only be based on the most recent actual value and will not take into consideration any previous forecasts.

Therefore, the correct answer is b. 0.0.