Question

The price of bananas fluctuates on the world market. The prices? ($/tonne) for the years

2000—2004

are shown in the table.

2000	2001	2002	2003	2004
374.84	645.52	502.23	335.36	571.81

?a) Find a 33?-year moving average prediction for the price in 2005

?b) Find a prediction for 2005 with an exponential smoothing model with ?=0.2 beginning with the initial value.

?c) The actual price of bananas in 2005 was 541?$/tonne.

------Compute the absolute percentange error for the 4-year moving average prediction

------Compute the absolute percentage error or the prediction found in part b.

Answer 1

a)

Year	actual(A)	forecast(F)
2000	374.84
2001	645.52
2002	502.23
2003	335.36	507.53
2004	571.81	494.37
2005		469.8

3?-year moving average prediction for the price in 2005 =469.8

b)

Year	actual(A)	forecast(F)
2000	374.84
2001	645.52	374.84
2002	502.23	428.98
2003	335.36	443.63
2004	571.81	421.97
2005		451.94

prediction for 2005 with an exponential smoothing model =451.94.

c)4-year moving average prediction F=(645.52+502.23+335.36+571.81)/4=513.73

therefore  absolute percentange error for the 4-year moving average prediction

=((|541-513.73|)/541)*100=5.04%

absolute percentage error or the prediction found in part b=((|451.94-541|)/541)*100=16.46%