From the course: Business Analytics: Forecasting with Exponential Smoothing

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Dissect the smoothing form

Dissect the smoothing form

From the course: Business Analytics: Forecasting with Exponential Smoothing

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Dissect the smoothing form

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- [Narrator] This worksheet shows the results of using the smoothing form of the exponential smoothing equation, rather than the error correction form of the equation, which was discussed in the prior lesson. Recall that the two forms of the equation return precisely the same results, which means that the two sets of forecasts are identical. So, the choice of which form to use is strictly a matter of personal preference. Although, the two forms emphasize different aspects of exponential smoothing and its useful to understand those aspects. The only structural difference between this worksheet and the one that demonstrated the error correction form, is that this worksheet shows the damping factor specifically. In this case, the damping factor is found in cell K1. The damping factor is simply the result of subtracting the smoothing constant from 1.0. One reason that it's useful to call out the damping factor specifically, as is done here in cell K1, is that the smoothing form of the…

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