Question

Consider the following time series data: Month 1 2 3 4 5 6 7 Value 23 13 21 13 19 24 15 (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?

Answer #1

a)

naïve | |||

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

1 | 23 | ||

2 | 13 | 23 | 100 |

3 | 21 | 13 | 64 |

4 | 13 | 21 | 64 |

5 | 19 | 13 | 36 |

6 | 24 | 19 | 25 |

7 | 15 | 24 | 81 |

total | 370 | ||

average | 61.67 | ||

MSE = |
61.7 |
||

forecast = |
15.00 |

b)

avereage of all data | |||

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

1 | 23 | ||

2 | 13 | 23.00 | 100.00 |

3 | 21 | 18.00 | 9.00 |

4 | 13 | 19.00 | 36.00 |

5 | 19 | 17.50 | 2.25 |

6 | 24 | 17.80 | 38.44 |

7 | 15 | 18.83 | 14.69 |

total | 200.38 | ||

average | 33.40 | ||

MSE = |
33.4 |
||

forecast = | 18.3 |

average of all the data available is better due to smaller MSE

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Value
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If required, round your answer to one decimal place.
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If required, round your answer to one decimal place. Do not
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Compute MSE using the most recent value as the forecast for the
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If required, round your answer to one decimal place.
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14
20
12
20
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(a)
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
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Month
1
2
3
4
5
6
7
Value
25
14
19
12
19
23
14
(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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Compute MSE using the average of all the data available as the...

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Month
1
2
3
4
5
6
7
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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.
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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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21
13
19
21
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5
6
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