Using your own words, describe the drawbacks of the moving average forecasting model and the drawbacks of the nalve forecasting model. Provide an example to contrast these two methods.

Explain different forecasting techniques like moving averages, exponential smoothing, regression etc.

How would you choose the appropriate number of factors to use in a forecasting model and how would you build a factor augmented VAR.

One forecasting model was used to forecast demand for a product. The forecasts and the demand are shown in the table below. Use two decimals in your answer. Actual Forecast 1 40 41 2 35 38 3 38 35 4 33 30 The Mean Absolute Deviation (MAD) is O 0.5 2.5 O 1.48 7.01

Forecasting assienment A clothing company wants to forecast the demand for its main product, based on the data below. Week Sales 1 7800 7725 3 4 7500 8550 9000 5 8925 17 8 14063 15075 9 10 11 12 17670 17442 18468 18354 13 18126 14 22040 15 16 17 30800 29568 30184 18 31108 19 20 32032 31416 Management would like you to experiment with different forecasting methods, using Excel, to determine which forecasting method to be implemented. 2. Simple moving average using Excel: 2.1 2.2 Calculate demand forecast for weeks 6-20 using 5 week simple moving average. Calculate demand forecast for weeks 10-20 using 9 week simple moving average. Plot the two simple moving on the obtained graph. Using the forecasting error measures seen in class, evaluate the forecasting error of each method. Accordingly which method is better? 2.3 age forecasts together with the actual demand. Comment 2.4

Following table shows the weekly sales of smart phones at electronic retail store: Week Number of smart phones Sold Forecast using 3 period moving average Error Forecast using exponential smoothing (with α =0.4) Error 1 48         2 41         3 55         4 64         5 62         6 55         7           8             Answer the following questions based on the data given above. Show all your calculations. What is the expected sales for the 7th week based on 3 period moving average. What is the forecast for the 8th week using the same method if the actual sales for week 7 happens to be 70?  What is the expected sales for the 7th week based on exponential smoothing with α = 0.3?  Which of the above two forecasting method is better based on MSE? Explain why?