Question

Time series forecasting

The actual observation for period t-1 was 125 while simple exponential smoothing (SES) forecasted value for period t-1 was 110. What is the SES forecast for period t when α = 0.2?

110

113

122

132

Answer 1

The simple exponential smoothing (SES) forecast for period t when α = 0.2 can be calculated using the given formula.

Step-by-step explanation:

The simple exponential smoothing (SES) forecast for period t when α = 0.2 can be calculated using the formula:

Forecast for period t = α × Actual observation for period t-1 + (1-α) × SES forecast for period t-1

In this case, the actual observation for period t-1 was 125 and the SES forecast for period t-1 was 110. Substituting these values into the formula:

Forecast for period t = 0.2 × 125 + (1-0.2) × 110 = 0.2 × 125 + 0.8 × 110 = 25 + 88 = 113

Therefore, the SES forecast for period t when α = 0.2 is 113.