Consider the Following time series data: Month 1 2 3 4 5 6 7 8 9 10 11 12 Value

Question

Consider the Following time series data: Month 1 2 3 4 5 6 7 8 9 10 11 12 Value 80 82 84 83 83 84 85 84 82 83 84 83 Question 1 Develop a three month average forecast. Compute MSE and a forecast for month 13. Question 2 Use a = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for month 13. Question 3 Compare the result for the three onth average and exponential smoothing. Which appears to provide a better forecast based on MSE? Explain. Consider the Following time series data: Month 1 2 3 4 5 6 7 8 9 10 11 12 Value 80 82 84 83 83 84 85 84 82 83 84 83 Question 1 Develop a three month average forecast. Compute MSE and a forecast for month 13. Question 2 Use a = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for month 13. Question 3 Compare the result for the three onth average and exponential smoothing. Which appears to provide a better forecast based on MSE? Explain.

Explanation / Answer

1) in three month average forecast we take average of last 3 months to forecast current period,

hence

from above three month average MSE =1.23 and forecast for 13th month =83.33

2)as in exponential smoothing

next forecast =previous forecast +a(actual -previous forecast)

here MSE =3.56 and 13th month forecast =83.07

3)based in MSE ,3 month average forecast is better as it takes last 3 month average value as forecast which is better eith respect to data where not too much of variability in the data.

If data would be highly variable then exponential smoothing would be better option.

month Value(X) 3 month average forecast(Xf) SE=(X-Xf)^2 1 80 2 82 3 84 4 83 82.00 1.00 5 83 83.00 0.00 6 84 83.33 0.44 7 85 83.33 2.78 8 84 84.00 0.00 9 82 84.33 5.44 10 83 83.67 0.44 11 84 83.00 1.00 12 83 83.00 0.00 13 83.33 MSE=total(SE/9) 1.23

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.