Question

(b)

Develop the three-week moving average forecasts for this time series. (Round your answers to two decimal places.)

Week	Time Series Value	Forecast
1	16
2	11
3	13
4	10
5	14
6	12

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for week 7?

(c)

Use α = 0.2 to compute the exponential smoothing forecasts for the time series.

Week	Time Series Value	Forecast
1	16
2	11
3	13
4	10
5	14
6	12

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for week 7? (Round your answer to two decimal places.)

(d)

Compare the three-week moving average approach with the exponential smoothing approach using

α = 0.2.

Which appears to provide more accurate forecasts based on MSE? Explain.

The three-week moving average provides a better forecast since it has a smaller MSE than the smoothing approach.The exponential smoothing using α = 0.2 provides a better forecast since it has a larger MSE than the three-week moving average approach.      The three-week moving average provides a better forecast since it has a larger MSE than the smoothing approach.The exponential smoothing using α = 0.2 provides a better forecast since it has a smaller MSE than the three-week moving average approach.

(e)

Use a smoothing constant of α = 0.4 to compute the exponential smoothing forecasts.

Week	Time Series Value	Forecast
1	16
2	11
3	13
4	10
5	14
6	12

Does a smoothing constant of 0.2 or 0.4 appear to provide more accurate forecasts based on MSE? Explain.

The exponential smoothing using α = 0.2 provides a better forecast since it has a larger MSE than the exponential smoothing using α = 0.4.The exponential smoothing using α = 0.2 provides a better forecast since it has a smaller MSE than the exponential smoothing using α = 0.4.      The exponential smoothing using α = 0.4 provides a better forecast since it has a larger MSE than the exponential smoothing using α = 0.2.The exponential smoothing using α = 0.4 provides a better forecast since it has a smaller MSE than the exponential smoothing using α = 0.2.

Answer 1

b)

		3 week
Time period	Actual Value(A)	Moving avg. Forecast(F)
1	16
2	11
3	13
4	10	13.33
5	14	11.33
6	12	12.33

MSE = 6.11

forecast for week 7 =12

c)

Time period	Actual Value(A)	Forecast(F)
1	16
2	11	16.00
3	13	15.00
4	10	14.60
5	14	13.68
6	12	13.74

MSE = 10.66

forecast for week 7 =13.40

d)

The three-week moving average provides a better forecast since it has a smaller MSE than the smoothing approach

e)

Time period	Actual Value(A)	Forecast(F)
1	16
2	11	16.00
3	13	14.00
4	10	13.60
5	14	12.16
6	12	12.90

The exponential smoothing using α = 0.4 provides a better forecast since it has a smaller MSE than the exponential smoothing using α = 0.2.