
Chapter 16
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16.12 DOUBLE EXPONENTIAL SMOOTHING
Single exponential smoothing does not incorporate trend and seasonal components of time series
data. There are techniques by which trend and seasonal components can be incorporated in a time
series, subject to their existence. In this section, we will focus upon the exponential smoothing
method which considers trend effects in forecasting. Holt’s two parameter technique is a tech-
nique which includes trend effects in forecasting. Holt’s double exponential smoothing method
for a period t
is given by
Forecast for the next period (F
t+1
) = E
t
+ T
t
where, E
t
= a
.
X
t
+ (1 – a) (E
t–1
+ T
t–1
)
and