Question

The table below contains average annual retail value data for crude oil in the US (actual data is $/barrel). The data was obtained from the inflationdata.com.

year	actual	year	actual
1997	28.43	2007	75.66
1998	17.89	2008	103.67
1999	24.28	2009	60.91
2000	38.92	2010	79.93
2001	31.81	2011	94.73
2002	31.02	2012	92.20
2003	36.85	2013	95.79
2004	48.77	2014	88.47
2005	62.66	2015	43.22
2006	70.77	2016	37.02

Problem 2 (moving average), c onstruct the worksheet for three period moving average for the 2001-2016.

Problem 3 (weighted moving average), c onstruct the worksheet for three period weighted moving average for 2001-2016. Use w1=0.6, w2=0.3, w3=0.1

Problem 4 (exponential smoothing), construct the worksheet for single-factor exponential smoothing with α= .25 to obtain the forecasts for 1998 through 2016. Assume that the forecast for 1997 is the same as the actual for 1997.

I'm just trying to check my work cause I'm getting variations in nuumbers. Please show an example how you set up at least one equation for each problem.

Answer 1

Answer 2: Constructing the forecast table from 2001-2016 using 3-period moving average.

In this method, we'll take the current forecast as the average of the last three actual values.

Forecast_2016 = (Actual_2015 + Actual_2014 + Actual_2013) / 3

= (43.22 + 88.47 + 95.79) / 3 = 75.83

Answer 3: Constructing the forecast table from 2001-2016 using the weighted moving average method.

Forecast_2016 = (Actual_2015 x 0.60) + (Actual_2014 x 0.30) + (Actual_2013 x 0.10)

= (43.22 x 0.60) + (88.47 x 0.30) + (95.79 x 0.10) = 62.05

Answer 4: Constructing the forecast table from 2001-2016 using the exponential smoothing method with Alpha = 0.25

Given that Forecast for the year 1997 is same as its actual = Forecast_1997 = 28.43

The formula for Exponential smoothing method is

Current forecast = Previous forecast + [Alpha x (Previous Actual - Previous Forecast)]

Forecast_1998 = Forecast_1997 + [Alpha x (Actual_1997 - Forecast_1997)]

= 28.43 + [0.25 x (28.43 - 28.43)] = 28.43