Business Analytics: Forecasting with Exponential Smoothing

Get an introduction to simple exponential smoothing, including how to assemble the forecast equation and optimize forecasts.

Introduction

• Welcome

1. The Idea Behind Exponential Smoothing

• Self-correcting forecasts
• From error correction to smoothing
• Exponentially declining influence of observations
• Identify the appropriate baseline

2. The Forecasting Equation

• Dissect the error correction form
• Dissect the smoothing form
• Exponential smoothing tool
• Initialize the forecasts

3. Measuring Forecast Accuracy

• The absolute deviation approach
• The least squares approach

4. Optimizing Forecasts

• Solver
• Set up the smoothing formula for Solver
• Solution in R

Conclusion

• Next steps