Question

Consider the following time series data:

Month |
1 | 2 | 3 | 4 | 5 | 6 | 7 |

Value |
24 | 13 | 20 | 12 | 18 | 23 | 16 |

(a) |
Compute MSE using the most recent value as the forecast for the next period. |

If required, round your answer to one decimal place. | |

What is the forecast for month 8? | |

If required, round your answer to one decimal place. Do not round intermediate calculation. | |

(b) |
Compute MSE using the average of all the data available as the forecast for the next period. |

If required, round your answer to one decimal place. Do not round intermediate calculation. | |

What is the forecast for month 8? | |

If required, round your answer to one decimal place. | |

(c) |
Which method appears to provide the better forecast? (options are: naive, all data average) |

Answer #1

a)

month | value | Forecast | |error| | |error|^2 |

1 | 24 | |||

2 | 13 | 24 | 11 | 121 |

3 | 20 | 13 | 7 | 49 |

4 | 12 | 20 | 8 | 64 |

5 | 18 | 12 | 6 | 36 |

6 | 23 | 18 | 5 | 25 |

7 | 16 | 23 | 7 | 49 |

total | 44 | 344 | ||

average | 7.33 | 57.33 | ||

MSE = |
57.3 |
|||

forecast = |
16.0 |

b)

month | value | Forecast | (error)^2 |

1 | 24 | ||

2 | 13 | 24.00 | 121.00 |

3 | 20 | 18.50 | 2.25 |

4 | 12 | 19.00 | 49.00 |

5 | 18 | 17.25 | 0.56 |

6 | 23 | 17.40 | 31.36 |

7 | 16 | 18.33 | 5.44 |

total | 209.62 | ||

average | 34.94 | ||

MSE = |
34.9 |
||

forecast = |
18.0 |

c)

all data average is better due to smallest MSE

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If required, round your answer to one decimal place.
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1
2
3
4
5
6
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25
14
20
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20
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Compute MSE using the most recent value as the forecast for the
next period.
If required, round your answer to one decimal place.
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If required, round your answer to one decimal place. Do not
round intermediate calculation.
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Month
1
2
3
4
5
6
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25
14
19
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Compute MSE using the most recent value as the forecast for the
next period.
If required, round your answer to one decimal place.
What is the forecast for month 8?
If required, round your answer to one decimal place. Do not
round intermediate calculation.
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Compute MSE using the average of all the data available as the...

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Month
1
2
3
4
5
6
7
Value
25
14
19
11
20
22
16
(a)
Compute MSE using the most recent value as the forecast for the
next period.
If required, round your answer to one decimal place.
What is the forecast for month 8?
If required, round your answer to one decimal place. Do not
round intermediate calculation.
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