QUESTION 1 Weekly closing prices (in RM) for Telstra for Sept 2015 - October 2015 is as follows: Week Share Price 1 3.47 2 3.58 3 3.41 4 3.39 5 3.25 6 3.40 7 3.35 8 3.51 9 3.41 10 3.41 Solve: 1. Use a 3 week moving average (SMA) to forecast the price for week 11. 2. Use a 3 week weighted moving average (WMA) to forecast the price for week 11. Use the weight of 3 for the latest period, 2 for the second latest period and 1 for the third latest period. 3. Use the exponential moving average (EMA) forecast to forecast price for week 11. Use α = 0.2 as the smoothing constant. Initial week 1 forecast was 3.47.
QUESTION 1
Weekly closing prices (in RM) for Telstra for Sept 2015 - October 2015 is as follows:
| Week | Share Price |
| 1 | 3.47 |
| 2 | 3.58 |
| 3 | 3.41 |
| 4 | 3.39 |
| 5 | 3.25 |
| 6 | 3.40 |
| 7 | 3.35 |
| 8 | 3.51 |
| 9 | 3.41 |
| 10 | 3.41 |
Solve:
1. Use a 3 week moving average (SMA) to forecast the price for week 11.
2. Use a 3 week weighted moving average (WMA) to forecast the price for week 11. Use the weight of 3 for the latest period, 2 for the second latest period and 1 for the third latest period.
3. Use the exponential moving average (EMA) forecast to forecast price for week 11. Use α = 0.2 as the smoothing constant. Initial week 1 forecast was 3.47.
4. Which forecast gave the best result? Use MAD to find out.
QUESTION 2
Sales of Cool Man air conditioners have grown steadily during the past five years:
| Year | Sales |
| 1 | 450 |
| 2 | 495 |
| 3 | 518 |
| 4 | 563 |
| 5 | 584 |
| 6 | ? |
*The sales manager predicted that year 1 sales would be 450 air conditioners.
Solve:
1. Using α = 0.30, develop forecast for year 2 to 6
2. Use α = 0.60 and α = 0.90, develop forecast for year 2 to 6
3. Referring to item 1 and item 2, which smoothing constant gives a more accurate forecast? Use MSE and MAPE for your answer.
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