In this Time Series model, the simple exponential smoothing forecasts are "enhanced" by an exponential trend component (smoothed with parameter g). For example, suppose we wanted to predict the overall monthly costs of repairs to a production facility. There could be an exponential trend in the cost, that is, from year to year the costs of repairs may increase by a certain percentage or factor, resulting in a gradual exponential increase in the absolute dollar costs of repairs.

To compute the smoothed value (forecast) for the first observation in the series, both estimates of S0 and T0 (initial trend) are necessary. By default, these values are computed as:

T0 = (X2/X1)

and

S0 = X1/ÖT0

See also, Nonseasonal, Damped Trend; Nonseasonal, Linear Trend (Holt's Two-Parameter Method); and Nonseasonal, No Trend.