Question

Consider the following time series data.

Week	1	2	3	4	5	6
Value	19	13	17	11	17	15

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).

MSE
The forecast for week 7

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

MSE
The forecast for week

d. Compare the three-week moving average approach with the exponential smoothing approach using a=.2. Which appears to provide more accurate forecasts based on MSE?
- Select your answer -The three-week moving average provides a better forecast since it has a smaller MSEThe exponential smoothing approach provides a better forecast since it has a smaller MSEThe three-week moving average provides a better forecast since it has a larger MSEItem 7

e. Use a smoothing constant of a=.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?

The exponential smoothing forecast using a=.4 provides - Select your answer -worsebetterItem 9 forecast than the exponential smoothing forecast using a=.2 since it has a smaller MSE.

Answer 1

b)

Time period	Actual Value(A)	Moving avg. Forecast(F)	Forecast error E=|A-F|	Squared Forecast Error
1	19
2	13
3	17
4	11	16.33	5.33	28.44
5	17	13.67	3.33	11.11
6	15	15.00	0.00	0.00
		Total	8.67	39.56
		Average	2.89	13.19
			MAD	MSE
MSE =			13.19
forecast for week 7 =	14.33

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	17	17.80	0.80	0.64
4	11	17.64	6.64	44.09
5	17	16.31	0.69	0.47
6	15	16.45	1.45	2.10
		Total	15.58	83.30
		Average	3.12	16.66
			MAD	MSE
MSE =			16.66
forecast for week 7 =	16.16

d)

The three-month moving average provides a better forecast since it has a smaller MSE

e)

MSE = 15.21

0.4 provides a better forecast