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A modification is proposed to forecasting systems employing exponential smoothing whereby the response rate is varied and made to depend on the value of a tracking signal. In a simple system, this is equivalent to varying α the smoothing constant according to the extent to which biased forecasts are being obtained. Such a system is shown to react much faster to, for example, step changes whilst still retaining the facility to filter out random noise.
Trigg et al. (Wed,) studied this question.
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