Question

observation, and 1/6 for the third most recent observation, compute a three-week weighted moving average for the time series. 2. a. Using a weight of 1/2 for the most recent observation, 1/3 for the second most recent Error Forecast Sales Week 17 21 19 23 18 16 20 18 10 20 15 12 b. Compute the MSE for the weighted moving average in part (a) MSE - c. Do you prefer this weighted moving average to the unweighted moving average (remember that the MSE for the unweighted three-week moving average is 10.22)? Explain your answer.

Answer 1

a)

week	sales	forecast	error	error^2
1	17
2	21
3	19
4	23	19.33	3.67	13.44
5	18	21.33	-3.33	11.11
6	16	19.83	-3.83	14.69
7	20	17.83	2.17	4.69
8	18	18.33	-0.33	0.11
9	22	18.33	3.67	13.44
10	20	20.33	-0.33	0.11
11	15	20.33	-5.33	28.44
12	22	17.83	4.17	17.36
			total	103.42
			average	11.49

b)

MSE =11.49

c)

No; as its MSE is higher than MSE of unweighted three week moving average forecast