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exponential smoothing

   Also found in: Wikipedia 0.04 sec.

exponential smoothing

A widely used technique in forecasting trends, seasonality and level change. Works well with data that has a lot of randomness.


exponential smoothing [‚ek·spə′nen·chəl ′smüth·iŋ]
(industrial engineering)
A mathematical-statistical method of forecasting used in industrial engineering which assumes that demand for the following period is some weighted average of the demands for the past periods.


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Forecasting, based on sales history, can be done using polynomial regression, exponential smoothing with trend analysis or time series analysis.
It provides coverage of seasonal decomposition, mean reversion, heavy-tailed distributions, exponential smoothing, spike pre-processing, autoregressive time series including models with exogenous variables and heteroskedastic (GARCH) components, regime-switching models, interval forecasts, jump-diffusion models, derivatives pricing and the market price of risk.
As shown in exhibit 2, page 67, Excel offers an exponential smoothing and moving-average trend line in addition to the regression choices.
 
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