Answered: Construct a time series plot. What type…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.7: Exponential Smoothing Models

Problem 25P: The file P13_25.xlsx contains the quarterly numbers of applications for home mortgage loans at a...

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Question

Consider the following time series data.

Week	1	2	3	4	5	6	7
Value	25	13	22	12	20	23	16

(a)

Construct a time series plot. What type of pattern exists in the data?

The data appear to follow a trend pattern.The data appear to follow a horizontal pattern. The data appear to follow a cyclical pattern.The data appear to follow a seasonal pattern.

(b)

Develop a three-week moving average for this time series. (Round your answers to two decimal places.)

Week	Time Series Value	Forecast
1	25
2	13
3	22
4	12
5	20
6	23
7	16

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for week 8? (Round your answer to two decimal places.)

(c)

Use ? = 0.2 to compute the exponential smoothing values for the time series. (Round your answers to three decimal places.)

Week	Time Series Value	Forecast
1	25
2	13
3	22
4	12
5	20
6	23
7	16

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for week 8? (Round your answer to two decimal places.)

(d)

Compare the three-week moving average forecast with the exponential smoothing forecast using

? = 0.2.

Which appears to provide the better forecast based on MSE?

The three-week moving average provides a better forecast since it has a larger MSE than the exponential smoothing using ? = 0.2.The exponential smoothing using ? = 0.2 provides a better forecast since it has a smaller MSE than the three-week moving average. The three-week moving average provides a better forecast since it has a smaller MSE than the exponential smoothing using ? = 0.2.The exponential smoothing using ? = 0.2 provides a better forecast since it has a larger MSE than the three-week moving average.

(e)

Use trial and error to find a value of the exponential smoothing coefficient ? that results in a smaller MSE than what you calculated for ? = 0.2.

? =

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