Chapter 1 Introduction

I started writing this book in 2020 during the COVID-19 pandemic, having figured out that it had been more than ten years since publication of the fundamental monograph of Hyndman et al. (2008). Their original book discussed ETS (Error-Trend-Seasonality) model in the Single Source of Error (SSOE) form and that the topic has not been updated substantially since then. If you are interested in learning more about exponential smoothing, then this is a must-read material on the topic.

However, there has been substantial progress in the area since 2008, and I have developed some models and functions based on SSOE, making the framework more flexible and general. Given that publication of all aspects of these models in peer-reviewed journals would be very time consuming, I have decided to summarise all progress in this book, showing what happens inside the models and how to use the functions in different cases, so that there is a source to refer to.

Many parts of this monograph rely on such topics as a model, scales of information, model uncertainty, likelihood, information criteria and model building. All these topics are discussed in detail in the online textbook of Svetunkov (2022a). You are recommended to familiarise yourself with them before moving to ADAM’s more advanced modelling topics.

In this chapter, we explain what forecasting is, how it is different from planning and analytics and the main forecasting principles one should follow in order not to fail in trying to predict the future.


• Hyndman, R.J., Koehler, A.B., Ord, J.K., Snyder, R.D., 2008. Forecasting with Exponential Smoothing. Springer Berlin Heidelberg.
• Svetunkov, I., 2022a. Statistics for business analytics. (version: 31.03.2022)