Refer to the gasoline sales time series data in the given table. (a) Compute fou

Question

Refer to the gasoline sales time series data in the given table. (a) Compute four-week and five-week moving averages for the time series. If required, round your answers to two decimal places. (b) Compute the MSE for the four-week and five-week moving average forecasts. If required, round your final answers to three decimal places. MSE for four-week moving average = MSE for five-week moving average = (c) What appears to be the best number of weeks of past data (three, four, or five) to use in the moving average computation? Consider that the MSE for the three-week moving average is 12.852.

Explanation / Answer

Excel is attached

B) MSE of 4-period = 8.944 MSE of 5-period = 7.440

C) MSE of 5-period is lowest. Hence, 5 period of data is the best fit

week Value 4-period MA 5-period MA (Value- 4Period MA)^2 (Value- 5Period MA)^2 1 17 2 21 3 16 4 24 5 17 19.5 6.25 6 18 19.5 19 2.25 1 7 22 18.75 19.2 10.5625 7.84 8 20 20.25 19.4 0.0625 0.36 9 21 19.25 20.2 3.0625 0.64 10 19 20.25 19.6 1.5625 0.36 11 16 20.5 20 20.25 16 12 25 19 19.6 36 29.16 Total Squared error 80 55.36 Mean square error `= sqrt(TSE/n) 8.944272 7.44043

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