Question

Problem 15-07 (Algorithmic) Refer to the gasoline sales time series data in the given table. 1 Week Sales (1000s of gallons) 17 2 20 21 11 14 22 a. Compute four-week and five-week moving averages for the time series. Round your answers to two decimal places. 4-Week 5-Week Moving Average Moving Average Week Sales 17 9 10 11 12 17 DE 23 21 C C 14 22 b. Compute the MSE for the four-week and five-week moving average forecasts. Round your intermediate calculations and final answers to two decimal places. MSE for four-week moving average = MSE for five-week moving average = c. What appears to be the best number of weeks of past data (three, four, or five) to use in the moving average computation? Recall that MSE for the three-week moving average is 16.82.

Answer 1

a)

		3 period	4 period	5 period
week	sales		forecast	forecast
1	17
2	20
3	19
4	24
5	17		20.00
6	15		20.00	19.4
7	21		18.75	19
8	17		19.25	19.2
9	23		17.50	18.8
10	21		19.00	18.6
11	14		20.50	19.4
12	22		18.75	19.20

b)

MSE for 4 week moving average =16.40

MSE for 5 week moving average =12.66
c)

5 period MSE is better because of lower MSE