Answered: (a) Construct a time series plot. What…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.7: Exponential Smoothing Models

Problem 29P: The file P13_29.xlsx contains monthly time series data for total U.S. retail sales of building...

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Question

Centerville Bikes and Stuff (CBS) sells motorcycles and accessories. The number of helmets sold by CBS per week for the past six weeks follows.

Week	1	2	3	4	5	6
Value	18	11	14	10	17	12

(a)

Construct a time series plot.

What type of pattern exists in the data?

The data appear to follow a seasonal pattern.The data appear to follow a trend pattern. The data appear to follow a horizontal pattern.The data appear to follow a cyclical pattern.

(b)

Develop the three-week moving average for this time series. (Round your answers to two decimal places.)

Week	Time Series Value	Forecast
1	18
2	11
3	14
4	10
5	17
6	12

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for week 7?

(c)

Use ? = 0.2 to compute the exponential smoothing values for the time series.

Week	Time Series Value	Forecast
1	18
2	11
3	14
4	10
5	17
6	12

Compute MSE. (Round your answer to two decimal places.)

MSE =

What is the forecast for week 7? (Round your answer to two decimal places.)

(d)

Compare the three-week moving average forecast with the exponential smoothing forecast using

? = 0.2.

Which appears to provide the better forecast based on MSE? Explain.

The three-week moving average provides a better forecast since it has a larger MSE than the smoothing approach.The exponential smoothing using ? = 0.2 provides a better forecast since it has a smaller MSE than the three-week moving average approach. The three-week moving average provides a better forecast since it has a smaller MSE than the smoothing approach.The exponential smoothing using ? = 0.2 provides a better forecast since it has a larger MSE than the three-week moving average approach.

(e)

Use ? = 0.4 to compute the exponential smoothing values for the time series.

Week	Time Series Value	Forecast
1	18
2	11
3	14
4	10
5	17
6	12

Does a smoothing constant of 0.2 or 0.4 appear to provide more accurate forecasts based on MSE? Explain.

The exponential smoothing using ? = 0.4 provides a better forecast since it has a larger MSE than the exponential smoothing using ? = 0.2.The exponential smoothing using ? = 0.4 provides a better forecast since it has a smaller MSE than the exponential smoothing using ? = 0.2. The exponential smoothing using ? = 0.2 provides a better forecast since it has a smaller MSE than the exponential smoothing using ? = 0.4.The exponential smoothing using ? = 0.2 provides a better forecast since it has a larger MSE than the exponential smoothing using ? = 0.4.

Expert Solution

Step 1 Introduction:

For the given data, very first, I would construct the time series plot, based on this plot, I would identify a pattern, there are multiple subparts, the first three sub-parts are taken for answering purposes, the detailed descriptions are mentioned below,

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