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Holts method

What is the parameter to HOLTS method?

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    Former Member
    Jan 18, 2010 at 05:29 PM

    Holt's method is for a time series that is not seasonal but does display an upward or downward trend.

    The beta parameter controls how reactive the model is to the changes in the trend. Be careful with this setting -- trend models can be unpredictable. A beta value that is fine at one point in time can produce an out-of-control model a few months later.

    My rule of thumb is to use a value of 0.20 if I think a model has a trend, and never more than 0.40.

    If you use a trend model, I highly recommend also using trend dampening profiles to ease off the trend values further out in the model's forecast horizon.

    Hope this helps!

    Dan

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    Former Member
    Jan 19, 2010 at 06:42 AM

    Hi Dallyanusha,

    SAP recommended values for the parameters are

    Alpha factor if other than 0.3

    Beta factor if other than 0.3

    Trend dampening profile (optional entry)

    Regards

    R. Senthil Mareeswaran.

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