exponential regression excel data analysis

#Exponential regression excel data analysis how to#

When we take the alpha value as 0.5, the exponential smoothing gives equal weightage, meaning it gives 50% weightage to recently forecasted and historical data.

Result: The chart will show the actual data points as well as the forecasted values based on an alpha value of 0.5. But instead of 0.8, enter “0.2” in the “Damping factor” option. Thus, the damping factor will be 0.2 (1 – 0.8).įollow the steps of the above example. Here, we will use the alpha value as 0.8 to give higher weightage to the historical data. In this example, let us use the same data points as Example #1. This results in a smoother forecast.Įxample #2: Higher Weightage to Historical Data

Also, it gives more weight to recently forecasted value and less weight to older or historical data, i.e., data of column B.

It means there are fewer peaks and valleys in the forecasted values, and the graph is smooth.

Here, the α value is small, and the damping factor is large so that the result will have a higher degree of smoothing.

The second forecasted value, Cell C2, has the same value as the first value of the past/historical dataset, i.e., Cell B1.

It means that there is no value before Cell B1 to calculate its forecast value.

The first forecasted or smoothed value, i.e., Cell C1, appears as “ #N/A” as there is no previous data point.

The forecasted values show an increasing trend.

Result: Excel calculates the forecasted values of the current year using the exponential smoothing method. Now, let us see examples of exponential smoothing forecasting using Excel. It can be between 0 and 1, where a smaller alpha value gives more weight to recently forecasted data, and a larger value gives more weight to historical data. The alpha value determines how much weight to give to the data points for the forecasting.

Tick the “ Chart Output” checkbox to display a chart.Īlpha Value (α): α is the smoothing constant, also known as the alpha value.

It is the range where you want the output data.

Enter the “ Damping factor.” You can calculate it using 1 – α.

Enter the “ Input Range.” It is the range of data you want to forecast.

Select the “ Exponential Smoothing” option.

Click the “ Data Analysis” tool on the “ Data” tab.

Follow the below steps to use Excel Exponential Smoothing: To do the exponential smoothing tool in Excel, you need to enter the following data in the exponential smoothing dialog box.

#Exponential regression excel data analysis how to#

How to Use Exponential Smoothing to Forecast in Excel? Typically, exponential smoothing predicts what the next value will be by smoothing out any ups and downs in the data, like extreme highs or lows (peaks and valleys).īusinesses mostly use exponential smoothing in Excel to predict future expenses, budgets, inventory, sales, etc.

For example, if you have annual sales data for five years (2017-2022), you can use exponential smoothing in Excel to predict value for the next year, i.e., 2023.

How are Weights Distributed? (Back-End Process)Įxponential smoothing is a popular in-built forecasting tool in Excel that uses past data to predict future values.

Comparing Forecasted Values from all Examples.

Example #3: Equal Weightage to All Data.Example #2: Higher Weightage to Historical Data.Example #1: Higher Weightage to Recently Forecasted Value.How to Use Exponential Smoothing to Forecast in Excel?.What is Exponential Smoothing in Excel?.