Time Series Forecasting Assignment
Using a spreadsheet and the following data (enter the data into the spreadsheet in Columns A and
B, so don’t just copy-and-paste), calculate the following forecasts: naïve, 3-period moving
average, 4-period moving average, 3-2-1 weighted moving average, 1-4-5 weighted moving
average,
=.1 exponential smoothing, and
=.8 exponential smoothing.
Round all forecasts to
whole numbers.
Period
1
2
3
4
5
6
7
8
9
10
Actual
974
766
727
849
693
655
854
742
717
852
Please answer the following questions:
1)
What two factors are you trying to balance when forecasting?
Accuracy and Simplicity
2)
As you increase the number of periods in a Moving Average or Weighted Moving
Average forecast, which factor is reduced (less of a problem)?
The variance is reduced
3)
Which factor does the Naïve forecast handle best?
Trends
4)
If you have 20 periods of historical data, how many would be included in the exponential
smoothing forecast for Period 21?
All periods starting after the first
5)
In what period can you begin forecasting a five-period Moving Average?
In the sixth
period.
