Forecasting is widely used in management and Excel allows us to solve simple forecasting tasks. Exponential smoothing is one of the most common techniques that is applied to time series data to make forecasts. It includes allpast observations and weighs recent observations much more heavily than older observations. Exceldummies.com teaches how this model is mainly used for smoothing and short-term forecasts.

Exponential Smoothing Formula

The equation to calculate an exponential smoothing is:

F_t= α A_t-1+ (1- α) Ft_-1

where

F_t – Forecast for the period t.
A_t-1 Actual value of the time-series in the prior period,
F_t-1Forecast made for the prior period,
α is the smoothing factor, and 0 < α < 1

This method combines the previous forecast with a weighted error measurement. The error comes from the difference between the prior forecast and actual observation at the time of the forecast. A forecast is made by revising the current forecast. The errors of the earlier forecast are checked so that corrections can be made in the new forecast.

Check out Exceldummies.com for Exponential Smoothing tutorial with the real life examples and FREE resources.

Excel’s linear trend analysis is a part of its regression analysis procedure. The regression analysis is used for identifying either a line or a curve that gives the most appropriate fit by using data points.The main idea behind this model is simply estimating the future values based on various kinds of trends or seasonal patterns in our data.

An equation for linear trend analysis can be put down as:

Yp= mX + b.

Yp: The predicted value for the variable which is dependent.

m: The slope of the regression line.

Y: intercept of the regression line is represented through b.

Easy Steps to Add a Trendlineto Your Chart in Excel

Linear trend analysis gives you the opportunity of displaying a linear trend line of a best fit line by using your available data. You can also see the best fit line equation and correlation efficient by using linear trend analysis. A trend line provides an idea about your sales that in which direction it is heading. Learn how to display a trend linewith exceldummies.comor follow these steps:

Click somewhere on your chart.

Go to the ribbon and click on layout.

Click on trendline further to the right.

Now select Linear trendline from options. A trendline will appear on your chart.

Exceldummies.com provides real life examples of Linear Trend Analysis.Visit exceldummies.com for self-paced Excel online video training.