Use the following time-series data to answer the given questions. a. Develop for

Question

Use the following time-series data to answer the given questions.

a. Develop forecasts for periods 5 through 10 using 4-month moving averages.

b. Develop forecasts for periods 5 through 10 using 4-month weighted moving averages. Weight the most recent month by a factor of 4, the previous month by 2, and the other months by 1.

c. Compute the errors of the forecasts in parts (a) and (b) and observe the differences in the errors forecast by the two different techniques.

(Round your answers to 3 decimal places.)


a.

b.

c.

In each time period, the four-month moving average produces

errors of forecast than the four-month weighted moving average.

Time Period Value 1 26 2 32 3 59 4 64 5 59 6 66 7 70 8 86 9 101 10 97

Explanation / Answer

Time Period Value 4 Month MA 4 Month WMA Error 4 MMA Error 4MWMA Differnce in Error_1 Difference in Error_2 1 26 2 32 3 59 4 64 5 59 45.25 54 13.75 5 8.75 0.636363636 6 66 53.5 56.875 12.5 9.125 3.375 0.27 7 70 62 63.125 8 6.875 1.125 0.140625 8 86 64.75 66.875 21.25 19.125 2.125 0.1 9 101 70.25 76.125 30.75 24.875 5.875 0.191056911 10 97 80.75 89 16.25 8 8.25 0.507692308 4 month Moving Average at time (i)=(value(i-1)+value(i-2)+value(i-3)+value(i-4))/4 4 Month Weighted moving avergae at time(i)=(4*value(i-1)+2*value(i-2)+value(i-3)+value(i-4))/8 Error 4 MMA at time(i)=value(i)-4 Month MA(i) Error 4 MWMA at time(i)=value(i)-4 Month WMA(i) Differnce in Error_1=Error 4MMA(i)-Error 4MWMA(i) Differnce in Error_2=(4MMA(i)-Error 4MWMA(i))/Error 4MMA(i) We can easily see that Weighted Moving average Yield less error

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