Time series smoothingWhy is it called Single Exponential Smoothing?

Consider the following: Let t = 3, then

SFt + 1 = aAt + (1- a) SFt becomes

SF4 = aA3 + (1- a) SF3

But SF3 = aA2 + (1- a) SF2 \

SF4 = aA3 + (1- a) (aA2 +(1- a) SF2)

Previous slide

Next slide

Back to first slide

View graphic version