Question

Month 3 5 6 7 12 31 20 27 19 26 30 22 Value (a) Compute MSE using the most recent value as the forecast for the next period. MSE - What is the forecast for month 8? (b) Compute MSE using the average of all the data available as the forecast for the next period. (Round your answer to two decimal places.) MSE - What is the forecast for month ? (c) Which method appears to provide the better forecast? The average of all the previous values provides a better forecast, because its MSE is smaller than the MSE using the most recent value. The most recent value provides a better forecast, because its MSE is smaller than the MSE using the average of all the previous values The most recent value provides a better forecast, because is forecast for month is smaller than the month 8 forecast using the average of al the previous values The average of all the previous values provides a better forecast, because its forecast for months larger than the month forecast using the most recent value.

please help

Answer 1

a)

month	value(A)	forecast(F)	(A-F)^2
1	31
2	20	31	121
3	27	20	49
4	19	27	64
5	26	19	49
6	30	26	16
7	22	30	64
		22
		total	363
		average	60.5

MSE = 60.5

forecast for month 8 = 22

b)

month	value(A)	forecast(F)	(A-F)^2
1	31
2	20	31	121
3	27	25.5	2.25
4	19	26	49
5	26	24.25	3.0625
6	30	24.6	29.16
7	22	25.5	12.25
		25
		total	216.7225
		average	36.1204

MSE = 36.1204

forecast for month 8 = 25

c) average of all data values is better method due to low MSE