Question

QUESTION:

By taking a time series of at least 15 observations/units, find and interpret MSE values ​​of α = 0.1 α = 0.5 and α = 0.9 using the Double Exponential Smoothing method.

Note:

- Calculations will be made manually.

- Only the first forecasting will be shown with annotation.

- Calculated values ​​will be tabulated as in the example in the lecture notes.

Answer 1

For α = 0.1:

The output is:

The formulas are:

MSE = 298.85

For α = 0.5:

The output is:

The formulas are:

MSE = 385.8682

For α = 0.9:

The output is:

The formulas are:

MSE = 557.2181

α = 0.1 is the best model because it has a lower MSE value.