A retail store experiences a steady upward trend in demand. The manager uses Simple Exponential Smoothing with α = 0.9 and observes that the fitted values closely follow recent demand.
Assertion (A): Increasing α sufficiently allows SES to model a persistent upward trend in the same way as Holt’s model.
Reason (R): A larger α increases the influence of the most recent observation on the updated level estimate.
Choose the correct option.

Question

A retail store experiences a steady upward trend in demand. The manager uses Simple Exponential Smoothing with α = 0.9 and observes that the fitted values closely follow recent demand.

Assertion (A): Increasing α sufficiently allows SES to model a persistent upward trend in the same way as Holt’s model.

Reason (R): A larger α increases the influence of the most recent observation on the updated level estimate.

Choose the correct option.

Accepted Answer

A is false, but R is true.

Answer

Both A and R are true, and R correctly explains A.

Answer

Both A and R are false.

Answer

Both A and R are true, but R does not explain A.

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A retail store experiences a steady upward trend in demand. The manager uses Si...

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