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The Following Times Series Shows the Demand for a Particular

Question 53

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The following times series shows the demand for a particular product over the past 10 months.  Month  Value 13242311330343145323631373028315931210326\begin{array} { | c | c | } \hline \text { Month } & \text { Value } \\\hline 1 & 324 \\\hline 2 & 311 \\\hline 3 & 303 \\\hline 4 & 314 \\\hline 5 & 323 \\\hline 6 & 313 \\\hline 7 & 302 \\\hline 8 & 315 \\\hline 9 & 312 \\\hline 10 & 326 \\\hline\end{array}
a. Use α = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for month 11.
b. Compare the three-month moving average forecast with the exponential smoothing forecast using α = 0.2. Which appears to provide the better forecast based on MSE?

Correct Answer:

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a. Smoothing constant α = 0.2 blured image MSE = 967...

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