Question

Develop a three-month moving average for this time series. Compute MSE and a forecast for month 8. If required, round your answers to two decimal places. Do not round intermediate calculation.

Answer 1

Answer:

The missing Table is;

Month  1  2  3  4  5  6  7

Value  24  13  21  14  20  23  15

MSE = 20.56

Forecast = 19.33

Explanation:

Table Formation

Month Value Forecast Error  Absolute Error Error Square

1          24    

2          13    

3          21    

4          14         19.33333 -5.33333 5.333333 28.44444

5          20           16                       4              4             16

6          23          18.33333 4.666667 4.666667 21.77778

7          15           19                   -4                       4             16

   

    20.55

    19.33

Table Explanation

In the above table, we first calculate the forecast column. A forecast is taken as the sum of the three entries in order and then taking out the average.

Error is calculated by subtracting the Actual value from the forecast value.

Then we take the absolute of the forecast value.

Then we take the square of the absolute of the forecasted values.

Now we calculate MSE as;

MSE = ( 28.44 + 16 + 21.78 + 16 ) / 4

MSE = 20.56

Forecast for 8th month  = ( 20 + 23 + 15 ) / 3

Forecast for 8th month  = 19.33