Answer to Question #266025 in Management for Sahba

Question

Use the basic exponential smoothing method with Alfa =0.2 and the two period moving average

Method to complete the table below

T Xt St

0 41.00

1 42

2 47

3 51

4 53

5 55

6 58

Which method seems more accurate?why

Answer 1

Nonseason patterns and trends can be extrapolated using a moving-average or smoothing model as a first step in advancing beyond mean models, random walk models, and linear trend models. Averaging and smoothing models are based on the premise that the time series is locally stationary with a slowly varying mean. As a result, we estimate the present value of the mean using a moving (local) average, which we then utilize as a projection for the near future.