Question

I need the answer for (e) : Use trial and error to find a value of the exponential smoothing coefficient α that results in a smaller MSE than what you calculated for α = 0.20. Use a two-decimal digit precision.

Consider the following time series data.

Week	1	2	3	4	5	6
Value	18	15	15	13	17	14

(b)

Develop a three-week moving average for this time series. Compute MSE and a forecast for week 7.

If required, round your answers to two decimal places.

Week	Value	Forecast
1	18
2	15
3	15
4	13	16.00
5	17	14.33
6	14	15.00

MSE: 5.70

The forecast for week 7: 14.67

c)

Use α = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 7.

If required, round your answers to two decimal places.

Week	Value	Forecast
1	18
2	15	18.00
3	15	17.40
4	13	16.92
5	17	16.14
6	14	16.31

MSE: 7.24

The forecast for week 7:  15.85

(d)

Compare the three-week moving average forecast with the exponential smoothing forecast using α = 0.2. Which appears to provide the better forecast based on MSE?

- Select your answer -Three-week moving averageExponential SmoothingItem 15

Explain.

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(e)

Use trial and error to find a value of the exponential smoothing coefficient α that results in a smaller MSE than what you calculated for α = 0.20. Use a two-decimal digit precision.

alpha:  

Answer 1

Solution:

e)Using trial and error method let us calculate MSE which is smaller.

I have used excel and attached the screenshot below.

From the above table minimum MSE=4.756802 for =0.52

The value of alpha that yields minimum MSE is =0.52

Please give a thumbs up if you are satisfied with the above answer.