Question

The dean of Mihaylo Business School is forecasting total student enrollment for next year based on the following historical data: Year Total Enrollment 2015 1600 2016 2000 2017 2200 2018 2600 2019 3000 Compare 2 year moving average and exponential smoothing with alpha=0.4, which forecasting approach is better? Using MAE as your forecast accuracy measure. Select one: a. Exponential smoothing with alpha=0.4 b. 2 year moving average

Answer 1

for 2 year moving average:

year	actual	forecast	|A-F|
2015	1600
2016	2000
2017	2200	1800	400
2018	2600	2100	500
2019	3000	2400	600
		average	500

MAE for 2 year moving average =500

for exponential smoothing with alpha=0.4 :

year	actual	forecast	|A-F|
2015	1600
2016	2000	1600	400
2017	2200	1760	440
2018	2600	1936	664
2019	3000	2201.6	798.4
		average	575.60

MAE for exponential smoothing with alpha=0.4 : =575.60

since MAE is less for 2 year moving average :

option B: 2 year moving average is better forecast