Operations
Manager
SIMPLE Overview
Simple
exponential smoothing (SIMPLE)
 More
than 25% of U.S.
corporations use some form of exponential smoothing as a forecasting
model. Smoothing models
are relatively simple, easy to understand, and easy to implement,
especially in spreadsheet form.
Smoothing models also compare quite favorably in accuracy
to complex forecasting models.
One of the surprising things scientists have learned about
forecasting in recent years is that complex models are not necessarily
more accurate than simple models.
The simplest form of exponential smoothing is called, appropriately
enough, simple smoothing. Simple
smoothing is used for short-range forecasting, usually just one
month into the future. The
model assumes that the data fluctuate around a reasonably stable
mean (no trend or consistent pattern of growth).
If the data contain a trend, use the trend-adjusted smoothing
model (TRENDSMOOTH).
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