Holt's Double Exponential Smoothing method is similar to Simple Exponential Smoothing. It calculates the level component to measure the level in the Forecast. It also adds the trend component to create a Linear trend in the Forecast. This equation is similar to a Linear Regression line and is useful when a product is experiencing an exponential growth or decline, while not experiencing Seasonality. If your data is dynamic and is not affected by seasonal factors, then Double Holt is an optimal method to use.
To use the Double Holt forecasting technique:
- Click on
and open the ForecastingExamples.xls file.
Note: The ForecastXExamples.xls file is a data example to demonstrate how the Croston’s Intermittent method is used. For your company’s purposes, you will have your own data available. - Open the Double Holt’s spreadsheet.
- Click in a cell containing data and open ForecastX by clicking on
. - Click on the Forecast Method tab.
- In the Forecast Technique area, scroll through the list of methods and select Double Holt. The Double Exponential Smoothing Holt Forecasting technique displays.
- On the Data Capture tab, click on the Data Cleansing link. The Data Cleansing window displays.
- In the Replace Outliers area, select ForecastX will then automatically remove the outliers and produce a more accurate Forecast.
- In the Reports tab, select the Audit Trail report.
- Click Finish.
After ForecastX produces the results in an Audit Trail report, the statistics are displayed to measure the values of your Double Holt forecast. The graph that is made of the actual, fitted, and forecast values enables you to see the trend in your new product.