Question

Given is a historical time series for job services demand in the prior 6 months.

Month	Demand
1	20
2	16
3	17
4	19
5	19
6	19

a) The MAD based on the Exponential smoothing α = 0.3 method =  (4 decimal places).

b) The MAD based on the 3 months moving average method =  (in 4 decimal places).

c) The MSE based on the 3 months moving average method = .

d) Use MAD as an criterion to evaluate forecasting methods I (exponential smoothing, α = 0.3) and II (3 month moving average). The most accurate forecasting methods between I and II is method =  (select to type in as I or II).

e) Month 4 Forecast based on the Exponential smoothing α = 0.2 method =  (4 decimal places).

f) Month 6 Forecast based on 3 months moving average method = (4 decimal places).

Answer 1

a)

Month	Demand	forecast exponential	abs(error)
1	20	20
2	16	20	4
3	17	18.8	1.8
4	19	18.26	0.74
5	19	18.482	0.518
6	19	18.6374	0.3626
		MAD	1.48412

MAD = 1.4841

b)

Month	Demand	forecast MA	abs(error)	error^2
1	20
2	16
3	17
4	19	17.66666667	1.333333	1.777778
5	19	17.33333333	1.666667	2.777778
6	19	18.33333333	0.666667	0.444444
			MAD	MSE
			1.222222	1.666667

MAD = 1.2222

c)

MSE = 1.6667

d)

MAD for moving average is less than Exponential

hence II

e)

using alpha = 0.2

forecast = 18.8771

f)

forecast using 3 MA = 19