Exponential Smoothing

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Exponential smoothening is a moving-average forecasting technique that weights past data in an Exponential manner so that most recent data carry more weight in the moving average.

With simple Exponential smoothening, the forecast Ft is made up of the last period forecast Ft–1 plus a portion, α, of the difference between the last periods actual demand At–1 and last period forecast Ft–1.

Ft = Ft–1 + (At–1– Ft–1).

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