Question

Month	1	2	3	4	5	6	7
Value	23	14	18	14	20	23	16

b. Develop the three-month moving average forecasts for this time series. Compute MSE and a forecast for month  (to 2 decimals if necessary). Enter negative values as negative number.

c. Use alpha=.2 to compute the exponential smoothing forecasts for the time series. Compute MSE and a forecast for month  (to 2 decimals). Enter negative values as negative number.

d. Compare the three-month moving average approach with the exponential smoothing approach using alpha=.2 . Which appears to provide more accurate forecasts based on MSE?

e. Use a smoothing constant of alpha=.4 to compute the MSE. (to 2 decimals).

Answer 1

b)

month	value	forecast	error	error^2
1	23
2	14
3	18
4	14	18.33	-4.33	18.78
5	20	15.33	4.67	21.78
6	23	17.33	5.67	32.11
7	16	19.00	-3.00	9.00
			total	81.67
			average	20.42

MSE =20.42

forecast =19.67

c)

month	value	forecast	error	error^2
1	23
2	14	23.00	-9.00	81.00
3	18	21.20	-3.20	10.24
4	14	20.56	-6.56	43.03
5	20	19.25	0.75	0.57
6	23	19.40	3.60	12.97
7	16	20.12	-4.12	16.96
			total	164.77
			average	27.46

MSE =27.46

forecast =19.29

d)

3 month moving average provides better,,,,,,,,,smaller MSE

e)

MSE=26.04