32. Exponential Smoothing F t = F t-1 â (fraction of the observed forecast error in t-1) If we forecast high in period t-1 ï error is positive ï adjustment to decrease current forecast If we forecast low in period t-1 ï error is negative ï adjustment to increase current forecast
38. Smaller values of α produce more stable forecasts, whereas larger values of α will produce forecasts which react more quickly to changes in the demand pattern.