I need a step-by-step explanation as to how to solve this problem. Method of Tim

Question

I need a step-by-step explanation as to how to solve this problem.

Method of Time Series

Use F6 period:

Please solve for the following:

a.       Naïve Average                                                 

b.      Arithmetic Average

c.       Moving Average (n=3)

d.      Weight Moving Average (n=3), weight 14,5,1

e.      Based on MFE

Year                                       Mileage                                Forecast                               |A1 – F1|

1                                              3000

2                                              4000

3                                              3400

4                                              3800

5                                              3700

Explanation / Answer

a) Naive Forecast - Last year's actual mileage will be current year's forecast.

b) Arithmetic Average - Average compounding for each year

c) Moving Average (n=3) - 3 year moving average forecast

Last 3 months average mileage will be the current month's forecast value

d) Weighted Moving Average (n=3), weight 14,5,1

Assigning weights 14,5,1 to the last 3 months with 14 for most recent month and so on. Taking an average of the weight*Mileage with the total of the weights(14+5+1=20)

Year Mileage Forecast |A1-F1| 1 3000 2 4000 3000 1000 3 3400 4000 600 4 3800 3400 400 5 3700 3800 100 6 3700

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