Question

Consider the following time series data

a. Which of the following is a correct time series plot for this data?

b. Develop the three-week moving average forecasts for this time series. Compute MSE and a forecast for week 7 (to 2 decimals if necessary) 

c. Use α = .2 to compute the exponential smoothing forecasts for the time series. Compute MSE and a forecast for week 7 ( 2 decimals). 

d. Compare the three-week moving average approach with the exponential smoothing approach using α-.2, which appears to provide more accurate forecasts based on MSE? 

e. Use a smoothing constant of α-,4 to compute the MSE (to 2 decimals) 

Does a smoothing constant of .2 or .4 appear to provide more accurate forecasts based on MSE? 

Answer 1

Horizontal

b)

		3 week
Time period	Actual Value(A)	Moving avg. Forecast(F)	Forecast error E=|A-F|	Squared Forecast Error
1	19
2	13
3	16
4	11	16.00	5.00	25.00
5	18	13.33	4.67	21.78
6	15	15.00	0.00	0.00
		Total	9.67	46.78
		Average	3.22	15.59
			MAD	MSE

MSE=15.59

forecast =14.67

c)

Time period	Actual Value(A)	Forecast(F)	Forecast error E=A-F	Squared Forecast Error
1	19
2	13	19.00	6.00	36.00
3	16	17.80	1.80	3.24
4	11	17.44	6.44	41.47
5	18	16.15	1.85	3.42
6	15	16.52	1.52	2.32
			17.61	86.44
		Average	3.52	17.29
			MAD	MSE

MSE=17.29

forecast =16.22

d)

3 month moving average is better due to smaller MSE

e)

MSE=15.99

provides a better forecast,,,,,,,,,,