Exponential Smoothing Is A Form Of Weighted Averaging. - An alternative representation is the component form. So, the weighted average form leads to the same forecast equation (7.1). Web hence, since the weights decrease exponentially and averaging is a form of smoothing, the technique was named exponential smoothing. For simple exponential smoothing, the only component included is the level, ℓt ℓ t. An equivalent arima(0,1,1) model can be constructed to represent the single exponential smoother. Web the last term becomes tiny for large t t.
An alternative representation is the component form. Web the last term becomes tiny for large t t. An equivalent arima(0,1,1) model can be constructed to represent the single exponential smoother. So, the weighted average form leads to the same forecast equation (7.1). For simple exponential smoothing, the only component included is the level, ℓt ℓ t. Web hence, since the weights decrease exponentially and averaging is a form of smoothing, the technique was named exponential smoothing.