It has been that forecasting using exponential smoothing is like a car by looking

in the rear-view mirror. What are the conditions that would have to exist for
driving a car that are analogous to the assumptions made when using
exponential smoothing?

In operations management, we forecast a wide range of future events, which could

significantly affect the long-term success of the firm. Most often the basic need for
forecasting arises in estimating customer demand for a firm’s products and services.
However, we may need aggregate estimates of demand as well as estimates for
individual products. In most cases, a firm will need a long-term estimate of overall
demand as well as a shorter-run estimate of demand for each individual product or
service. Short-term demand estimates for individual products are necessary to
determine daily or weekly management of the firm’s activities such as scheduling
personnel and ordering materials. On the other hand, long-term estimates of overall or
aggregate demand can be used in determining company strategy, planning long-term
capacity and establishing facility location needs of the firm.

The conditions that would have to exist for driving a car that are analogous to the
assumptions made when using exponential smoothing are that the immediate future will
be like the recent past. This would suggest:

            a.   No sharp curves or turns on the road

            b.   Constant traffic conditions

            c.   No traffic lights or stop signs

            d.   Constant road conditions