Question

Please use the following data:

Monthy Proportion of On Tme Payments
80
82
84
83
83
84
85
84
82
83
84
83

a. Calculate the following for a 3-month moving average forecast; round each to 2 decimal places:

b. Calculate the following for an exponential smoothing forecast with alpha = 0.2; round each to 2 decimal places:

c: Based on the MSE values that you calculated in Questions 1 & 2, what is the difference in the MSE for the 3-month moving average vs the exponential smoothing forecast with alpha = 0.2?
Round to 2 decimal places.

d: Based on the MSE values found in questions 1 & 2 above, which forecast is best?

Answer 1

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3 Period movin avegye Monthly Pegparton 9 (3MA) e C 3MA) Y arc = 0.2 T - 86 wono 4 82 hoo80 83 80.4 12.96 4 83 83.33 l 81.12 3.53 n 83.33 84 81.50 2.26 84 o 4.85 84-33 o oo 81-80 82. 24 82. 79 83.03 83-667 os 0 MA 7.6 1-46 1.06 h = 83 0.03 8.3.33 .44 82.83 82.86 os d 1-30 F 3. 222 39.10 3 month moving average is given by yter get yEtt It-2 yt denotes the value of monthly Peoportion at time MSE fos 3-M. - ? w t=2 ti = 3.222 - s. 322 10 using &- 0.2, exponenstial smoothing Jorecast is givers by Iffl = X Y + (1-0) I I choose yi=g, MSE Jos exponential Smoothing face cast . MSEE to 941)? 39.60 to -3.910.- from 6 and ③ 3 period moving average gives the better forecast See MSE is minimum at 3pes month moving average as compared to exponenta