An Exponential Smoothing Model Must Have a Smoothing Constant (α)

question 31

Multiple Choice

An exponential smoothing model must have a smoothing constant (α) _____ to be roughly equivalent to a moving average model with a seven-month moving average.

• A) less than or equal to 0.10
• B) more than 0.10 but less than or equal to 0.15
• C) more than 0.15 but less than or equal to 0.20
• D) more than 0.20

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Definitions:

Feasible

Refers to an option or action that is possible or practicable within available resources and constraints.

Present Value

The present value of a sum of money or a series of cash flows expected in the future, determined using a particular rate of return.

Interest Rate

The percentage charged on borrowed money or paid on invested capital.

Interest Rate

The proportion, typically expressed as a percentage, at which interest is charged by lenders on loans or paid by banks on deposits.