More Predictive Analytics: Microsoft Excel

3. Working with Trended Time Series

In This Chapter

Smoothing: The Basic Idea

About the Smoothing Approaches to Forecasting

Dealing with Trend: Holt’s Linear Exponential Smoothing

Using Holt’s Linear Exponential Smoothing

Various approaches to using a technique termed exponential smoothing for purposes of forecasting have been around for several decades. The most basic approach is called simple exponential smoothing. It is used in situations in which you don’t see, and you don’t expect to see, an ongoing upward or downward trend in your observations. The presence of seasonality in a time series, such as you see in monthly home sales and the incidence of flu, is another reason to avoid simple exponential smoothing. The bag of tricks includes ...