Exponential smoothing

Published by MBA Skool Team, Last Updated: July 08, 2012

What is Exponential smoothing?

It is a technique which is used to smooth out the data recorded over a period of time and it can also be used to predict the expected future values. It is applicable for data which can be random or occurring at some fixed intervals. It is called exponential smoothing as it assigns the weights for smoothing process in the exponential decreasing format.

It is commonly used in smoothing the financial data over a period of time and to smooth the economic fluctuation of the market.

curve

The formula for it is


formula

Sdenotes the exponential smoothing algorithm

here α is the smoothing factor, and 0 < α < 1.


This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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