Consider the following forecasting model:

x

^

t,t+

=a

^

t

+

i=1

i

b

^

t

with updating procedure

a

^

t

=x

t

+(1)(a

^

t1

+b

^

t1

)

b

^

t

=(a

^

t

a

^

t1

)+(1)b

^

t1

Which of the following statements is true?

Select all correct answers

As

approaches 1, the model output approaches that of an exponential smoothing model with a linear trend.

As

approaches 0, the model output approaches that of a simple exponential smoothing model.

This model allows to predict the demand for any given period in the future based on the forecasteda

andb

values in timet

.

As

approaches 0, the model output approaches that of a cumulative model.

is a dampening parameter for the trend, and it is useful to avoid underforecasting.

None of the above.