Chapter 5, Problem 6P

Consider the following time series data:

1. a. Construct a time series plot. What type of pattern exists in the data?
2. b. Develop a three-week moving average for this time series. Compute MSE and a forecast for week 8.
3. c. Use α = 0.2 to compute the exponential smoothing values for the time series. Compute MSE and a forecast for week 8.
4. d. Compare the three-week moving average forecast with the exponential smoothing forecast using α = 0.2. Which appears to provide the better forecast based on MSE?
5. e. Use trial and error to find a value of the exponential smoothing coefficient α that results in a smaller MSE than what you calculated for α = 0.2.