Question

1. The following data shows the quarterly profit (in thousands of dollars) made by a particular company in the past 3 years.

Year	Quarter	Profit ($1000s)
1	1	45
1	2	51
1	3	72
1	4	50
2	1	49
2	2	45
2	3	79
2	4	54
3	1	42
3	2	58
3	3	70
3	4	56

a.  Use α = 0.3 to compute the exponential smoothing values for the time series. Compute MSE and the forecast of profit (in $1000s) for the next quarter.

b. Compare the three-period moving average forecast with the exponential smoothing forecast using α = 0.3. Which appears to provide the better forecast based on MSE?

Answer 1

Answer:-

Given That:-

a.  Use α = 0.3 to compute the exponential smoothing values for the time series. Compute MSE and the forecast of profit (in $1000s) for the next quarter.

Use α = 0.3 to compute the exponential smoothing values for the time series.

b. Compare the three-period moving average forecast with the exponential smoothing forecast using α = 0.3. Which appears to provide the better forecast based on MSE?

Compare the three-period moving average forecast with the exponential smoothing forecast using α = 0.3.

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