Question

Use the following time-series data to answer the given questions. Time Period Value

1 -25

2- 32

3 -59

4- 62

5- 59

6 -65

7 -70

8 -86

9 -101

10- 97

a. Develop forecasts for periods 5 through 10 using 4-month moving averages. b. Develop forecasts for periods 5 through 10 using 4-month weighted moving averages. Weight the most recent month by a factor of 4, the previous month by 2, and the other months by 1. c. Compute the errors of the forecasts in parts (a) and (b) and observe the differences in the errors forecast by the two different techniques. (Round your answers to 3 decimal places.)

Answer 1

a)as 4 period forecast =(last 4 month total)/4

s. no	actual(A)	forecast(F)	|A-F|	(A-F)^2
1	25
2	32
3	59
4	62
5	59	44.5	14.500	210.250
6	65	53	12.000	144.000
7	70	61.25	8.750	76.563
8	86	64	22.000	484.000
9	101	70	31.000	961.000
10	97	80.5	16.500	272.250
		total	104.750	2148.063
		average	17.458	358.010

from above 4 period forecast in forecast column ; and

mean absolute deviation error(MAD)=17.458

amd mean square error (MSE)=358.010

b)

4-month weighted moving averages=(4*most recent month value+2*previous month value+other 2 month total)/8

s. no	actual(A)	forecast(F)	|A-F|	(A-F)^2
1	25
2	32
3	59
4	62
5	59	52.875	6.125	37.51563
6	65	56.375	8.625	74.39063
7	70	62.375	7.625	58.14063
8	86	66.375	19.625	385.1406
9	101	76	25	625
10	97	88.875	8.125	66.01563
		total	75.125	1246.20
		average	12.521	207.701

here  

mean absolute deviation error(MAD)=12.521

amd mean square error (MSE)=207.701

c)

as MAD and MSE are less for 4-month weighted moving averages ; hence it is better forecast for above data