Which of the following about the advantages of moving averages and exponential smoothing is INCORRECT?
Group of answer choices
Moving averages is intrinsic and does not depend on determination of weights.
Moving averages always takes care of irregular variations better..
Exponential smoothing is used for smoothing and short-term forecasting.
The number of observations lost is less in case of exponential smoothing.
Moving averages always takes care of irregular variations better.
The incorrect statement is:
Moving averages always takes care of irregular variations better.
To determine which statement about the advantages of moving averages and exponential smoothing is incorrect, let's examine each option:
1. "Moving averages is intrinsic and does not depend on determination of weights."
Explanation: This statement is correct. Moving averages are calculated by taking the average of a certain number of consecutive data points. It does not require the determination of weights.
2. "Moving averages always takes care of irregular variations better."
Explanation: This statement is incorrect. Moving averages smooth out data by averaging out fluctuations and irregular variations, but it may not always capture sudden changes or irregular patterns efficiently. Other methods, such as exponential smoothing, might be more effective in handling irregular variations.
3. "Exponential smoothing is used for smoothing and short-term forecasting."
Explanation: This statement is correct. Exponential smoothing is a technique commonly used for smoothing data and generating short-term forecasts. It assigns decreasing weights to older data points, giving more importance to recent observations.
4. "The number of observations lost is less in the case of exponential smoothing."
Explanation: This statement is incorrect. Exponential smoothing assigns decreasing weights to older observations, meaning that as time goes on, past data has less influence on the current value, potentially resulting in a loss of information over time. In comparison, moving averages retain all the original observations.
Therefore, the incorrect statement is: "Moving averages always takes care of irregular variations better."