Section 7'2: Exponential Smoothing

1
Section 7.2 Exponential Smoothing

• Quantitative Decision Making 7th ed
• By Lapin and Whisler

2
Patterns of demand

• Random- no pattern
• Simple exponential smoothing assumes model will
  stay steady at some point
• Trend long run general movement, either
• increasing or decreasing
• Double exponential smoothing
• Seasonal recurrent and periodic, every
• month, quarter, hour, etc.
• Triple exponential smoothing
• These will miss drastic departures from historic
  behavior

3
http//www.itl.nist.gov/div898/handbook/pmc/sectio
n4/pmc436.htm
4
http//www.itl.nist.gov/div898/handbook/pmc/sectio
n4/pmc436.htm
5
Practice
Intialization T2Y1, b2Y2-Y1, S2Y2/T2
6
Practice
7
Practice
8
Practice
9
Practice now its time to use new formulas!