Question

In: Statistics and Probability

Naïve Approach- Using the naïve approach forecast the average domestic airfare for 2014. Explain how you...

Naïve Approach- Using the naïve approach forecast the average domestic airfare for 2014. Explain how you calculated this value. How accurate do you think this forecast is?

Moving Averages: Using the 4-year moving average approach forecast the average airfare for 2014. Explain how you calculated this value. How accurate do you think this forecast is?

Exponential Smoothing: Using the exponential smoothing approach with α = 0.40 forecast average airfare for 2014. Explain how you calculated this value. Round each forecast to the nearest dollar and use the rounded amount in the formula for the following year. Year Average Airfare Forecast for time period:

Year Average Airfare   

Year Average Airfare Forecast for time period
2008 379.86
2009 341.27
2010 363.51
2011

381.14
2012 385.00
2013 85.97

Solutions

Expert Solution

Naive Approach:

Data Forecasts and Error Analysis
Period Demand Forecast Error Absolute Squared Abs Pct Err
Period 1 379.86
Period 2 341.27 379.86 -38.59 38.59 1489.188 11.31%
Period 3 363.51 341.27 22.24 22.24 494.6176 06.12%
Period 4 381.14 363.51 17.63 17.63 310.8169 04.63%
Period 5 385 381.14 3.86 3.86 14.8996 01.00%
Period 6 385.97 385 0.97 0.97 0.9409 00.25%
Total 6.11 83.29 2310.463 23.31%
Average 1.222 16.658 462.0926 04.66%
Bias MAD MSE MAPE
SE 27.75166
Next period 385.97

Moving Average:

Data Forecasts and Error Analysis
Period Demand Forecast Error Absolute Squared Abs Pct Err
Period 1 379.86
Period 2 341.27
Period 3 363.51
Period 4 381.14
Period 5 385 366.445 18.555 18.555 344.288 04.82%
Period 6 385.97 367.73 18.24 18.24 332.6976 04.73%
Total 36.795 36.795 676.9856 09.55%
Average 18.3975 18.3975 338.4928 04.77%
Bias MAD MSE MAPE
Next period 378.905

Exponential Smoothing:

Alpha 0.4
Data Forecasts and Error Analysis
Period Demand Forecast Error Absolute Squared Abs Pct Err
Period 1 379.86 369.25 10.61 10.61 112.5721 02.79%
Period 2 341.27 369.25 -27.98 27.98 782.8804 08.20%
Period 3 363.51 358.058 5.452 5.452 29.7243 01.50%
Period 4 381.14 360.2388 20.9012 20.9012 436.8602 05.48%
Period 5 385 368.5993 16.40072 16.40072 268.9836 04.26%
Period 6 385.97 375.1596 10.81043 10.81043 116.8654 0.0280085
Total 36.19435 92.15435 1747.886 25.04%
Average 6.032392 15.35906 291.3143 04.17%
Bias MAD MSE MAPE
SE 20.90386
Next period 379.483741

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