Question

1)

Calculate a three period moving average forecast for the months of July, August, and September 2011. Using the observed data and your forecasted values, calculate the MAPE for this forecasting method over those three months. Select the correct answer from the list given.

0.8%

2.6%

5.7%

7.9%

9.3%

27.9%

2)

Given this data, what forecasting method would be best to use to forecast the unemployment rate in January 2012?

Weighted moving average

Three-period moving average

Five-period moving average

Simple regression

Multiple regression

Exponential smoothing

Time-series decomposition

		Unemployment
Year	Month	Rate (%)
2010	Oct	6.8
	Nov	7.0
	Dec	7.5
2011	Jan	8.0
	Feb	8.2
	Mar	8.5
	Apr	8.6
	May	8.6
	Jun	8.9
	Jul	9.1
	Aug	8.8
	Sep	8.7
	Oct

Answer 1

1)

We have to calculate the MAPE for this forecasting method over those three months

Below table is showing the calculations

forecast for july month =(april+may+june)/3=8.7

forecast for Aug month =(may+june+july)/3=8.86

forecast for Sept month =(june+july+Sept)/3=8.93

Year	Month	Unemployment (A)	Forecast (F)	|A-F|/A
2010	Oct	6.8
	Nov	7
	Dec	7.5
2011	Jan	8
	Feb	8.2
	Mar	8.5
	Apr	8.6
	May	8.6
	Jun	8.9
	Jul	9.1	8.7	0.0440
	Aug	8.8	8.86	0.0068
	Sep	8.7	8.93	0.0264
	Oct		Total	0.0772
			Mean	0.0257

Hence MAPE will be =mean *100=0.026*100=2.6%

Option B is correct

2)

Three perios moving average method will be appropriate method