Question: (a) If forecasts are based on simple exponential smoothing, with X, denoting the smoothed value of the series at time f, show that the error

(a) If forecasts are based on simple exponential smoothing, with X, denoting the smoothed value of the series at time

f, show that the error made in forecasting X.. standing at time (-1), can be written

(b) Hence, show that we can write e = X-X X, X, -ae, from which we see that the most recent observation and the most recent forecast error are used to compute the next forecast.

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