Question

The Table in my homework question below is completely wrong. I am not sure where I went wrong in my calculations but coud you rework this question and answer the parts below??

Here are earnings per share for two companies by quarter from the first quarter of 2009 through the second quarter of 2012. Forecast earnings per share for the rest of 2012 and 2013. Use exponential smoothing to forecast the third period of 2012, and the time series decomposition method to forecast the last two quarters of 2012 and all four quarters of 2013. (It is much easier to solve this problem on a computer spreadsheet so you can see what is happening.)

		EARNINGS PER SHARE
	QUARTER	COMPANY A		COMPANY B
2009	I	$ 1.68		$ 0.21
	II	2.36		0.23
	III	1.21		0.21
	IV	1.30		0.35
2010	I	1.66		0.20
	II	2.08		0.36
	III	1.31		0.37
	IV	0.34		0.48
2011	I	0.34		0.35
	II	–0.19	(loss)	0.49
	III	–0.87	(loss)	0.51
	IV	0.24		0.52
2012	I	–1.65	(loss)	0.31
	II	0.37		0.52

a.

For the exponential smoothing method, choose the first quarter of 2009 as the beginning forecast. Make two forecasts: one with α = 0.20 and one with α = 0.30. (Negative values should be indicated by a minus sign. Round your answers to 3 decimal places.) For the exponential smoothing method, choose the first quarter of 2009 as the beginning forecast. Make two forecasts: one with α = 0.20 and one with α = 0.30. (Negative values should be indicated by a minus sign. Round your answers to 3 decimal places.) Company A Company B           Quarter Forecast α = 0.20 Forecast α = 0.30 Forecast α = 0.20 Forecast α = 0.30 2009    I                            II                            III                            IV                 2010     I                             II                            III                             IV                 2011     I                             II                             III                             IV                 2012      I                              II                             III                 b-1. Calculate the MAD for each forecast using data starting with second quarter of 2009 through second quarter of 2012. (Round your answers to 3 decimal places.) MAD     Company A     Company B   α = 0.20         α = 0.30       b-2. Using the MAD method of testing the forecasting model's performance, plus actual data from 2009 through the second quarter of 2012, how well did the model perform?   Based upon MAD, (Click to select)0.30.2 performs better than an α of (Click to select)0.20.3.

Answer 1

for exponential smoothing: forecast =alpha*actual for last month+(1-alpha)*forecast for last month

a)

		company A			company B
Quarter	Forecast	Forecast		Forecast	Forecast
	α = 0.20	α = 0.30		α = 0.20	α = 0.30
2009    I
II	1.680	1.680		0.21	0.21
III	1.816	1.884		0.214	0.216
IV	1.695	1.682		0.213	0.214
2010     I	1.616	1.567		0.241	0.255
II	1.625	1.595		0.232	0.238
III	1.716	1.741		0.258	0.275
IV	1.635	1.611		0.280	0.303
2011     I	1.376	1.230		0.320	0.356
II	1.169	0.963		0.326	0.354
III	0.897	0.617		0.359	0.395
IV	0.543	0.171		0.389	0.430
2012      I	0.483	0.192		0.415	0.457
II	0.056	-0.361		0.394	0.413
III	0.119	-0.142		0.419	0.445

b-1)

		MAD
		Company A		Company B
alpha=0.2		0.830		0.104
alpha=0.3		0.784		0.093

b-2)

Based upon MAD )0.3 performs better than an α of 0.2