HP 12C manual Selecting the best smoothing constant α, Forecasting

6		42-	44	6
00		43-43, 33		00
	REGISTERS
n: Unused		i: Unused
PV: Unused		PMT: Unused
FV: Unused		R0: α
R1: 1-α		R2: St-1
R3: Tt-1		R : Σe2
	4
R5: Dt		R :	t+1
	6
R7-R.4: Unused

Selecting the "best" smoothing constant (α):

1.Key in the program and press CLEAR .

2.Key in the number 1 and press .

3.Key in the "trial " and press 0 1.

4.Key in the first historical value (X1) and press 2.

5.Key in the second historical value (X2) and press 6 . The result is the error between the forecast value ( t+1) and the true value (Xt+1)

6.Press ; the display shows the next forecast ( t+2).

7.Optional: Press 5 to display the smoothed estimate of current demand.

8.Continue steps 5 and 6 for X3, X4, ... Xn until all historical values have

been entered. When doing step 5 merely key in the value and press

(do not press 6).

9.Press 4. This value represents the cumulative forecasting error

(Σe2). Record the value and the following additional values; press 0

(α), 2 (smoothed average St-1), 3 (trend Tt-1) and 6 (forecast t+1).

10.Press CLEAR .

11.Repeat steps 2 through 10 until a "best" α is selected based on the lowest cumulative forecasting error (Register 4).

Forecasting:

90