How Does the System Optimize the Smoothing Factors

The process of the ex-post forecast described above is used for parameter optimization in order to optimize the smoothing factors. In the article master, you can store whether parameter optimization is to take place during the forecast and if it is to take place, the degree of optimization you want to select.

When a forecast is carried out with parameter optimization, the system will start from an initial value and then gradually increase the increment of the smoothing factors in every simulation run. (This constitutes the first stage of the ex-post forecast.) The increment in this case is specified in the article master record by the optimization level. The system then further analyzes the situation for the parameter combination with the smallest MAD (second stage). The optimum parameter combination is the combination which has the lowest possible MAD.