Question

Use trial and error to find a value of the exponential smoothing coefficient α that results in the smaller MSE than what you calculated for α = 0.2.
	If required, round your answer to two decimal places.
	α =

Answer 1

b)

For a=0.3, we get -

Year	Original Value	Forecasted Value	Error	Squared Error
1	234	234	0	0
2	287	234	53	2809
3	255	249.9	5.1	26.01
4	310	251.43	58.57	3430.4449
5	298	269.001	28.999	840.942001
6	250	277.7007	-27.7007	767.3287805
7	302	269.39049	32.60951	1063.380142
8	267	279.173343	-12.173343	148.1902798
9	225	275.5213401	-50.5213401	2552.405805
10	336	260.3649381	75.63506193	5720.662593
SUM				17358.3645

For a=0.4, we get -

Year	Original Value	Forecasted Value	Error	Squared Error
1	234	234	0	0
2	287	234	53	2809
3	255	255.2	-0.2	0.04
4	310	255.14	54.86	3009.6196
5	298	271.598	26.402	697.065604
6	250	279.5186	-29.5186	871.347746
7	302	270.66302	31.33698	982.0063155
8	267	280.064114	-13.064114	170.6710746
9	225	276.1448798	-51.1448798	2615.79873
10	336	260.8014159	75.19858414	5654.827057
SUM				16810.37613

So, MSE is less for a = 0.4