1. Suppose that in the simple exponential smoothing method, the smoothing constant a is set equal to 1. What forecasts will result?
2. Comment on the following statement: We know that all business and economic time series exhibit variability through time. Yet if simple exponential smoothing is used, the same forecast results for all future values of the time series. Since we know that all future values will not be the same, this is absurd.
3. The data file Industrial Production Canada shows an index of industrial production for Canada over a period of 15 years. Use the Holt-Winters procedure with smoothing constants a = 0.7 and b = 0.5 to obtain forecasts over the next 5 years
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