The Holt-Winters method, also known as exponential smoothing, is a statistical technique used for forecasting time series data that exhibits trends and seasonality. It involves three components: level, trend, and seasonality, which are updated continuously as new data arrives. The method operates by applying weighted averages to historical observations, where more recent observations carry greater weight.
Mathematically, the Holt-Winters method can be expressed through the following equations:
Where:
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