HW03b_sol - Homework 4 Solutions Problem 4-13 Part A The forecast for the first quarter of 2000 based on an exponential smoothing average of 0.4 is

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Homework 4 Solutions Page 1 of 5 Problem 4-13 Part A The forecast for the first quarter of 2000 based on an exponential smoothing average of 0.4 is 326.4 Forecast (Alpha = 0.4) Q1 Q2 Q3 Q4 1986 77.4 77.4 82.0 86.0 1987 83.5 81.1 84.3 87.5 1988 84.6 80.5 122.4 138.4 1989 154.3 144.2 149.9 154.2 1990 148.0 139.7 143.7 146.9 1991 141.3 126.0 130.3 134.7 1992 130.2 121.1 127.1 131.7 1993 128.5 119.5 129.5 140.1 1994 139.4 128.3 136.9 145.6 1995 144.1 134.1 143.6 154.3 1996 153.3 143.0 157.1 170.0 1997 169.8 162.4 172.3 183.1 1998 182.4 199.4 246.7 284.6 1999 291.0 272.6 296.9 326.1 2000 326.4 Part B The forecast for the first quarter of 2000 based on an exponential smoothing average of 0.6 is 311.0 Forecast (Alpha = 0.6) Q1 Q2 Q3 Q4 1986 0.0 130.0 102.8 38.6 1987 36.4 63.7 65.4 55.4 1988 103.4 10,961.9 1,601.6 1,577.0 1989 633.7 201.5 114.9 239.3 1990 431.9 102.6 63.7 196.4 1991 1,467.5 117.0 120.8 125.6 1992 525.5 226.4 132.9 63.7 1993 501.3 618.3 708.6 3.7 1994 759.4 460.8 465.7 14.1 1995 622.6 572.6 716.0 6.5 1996 672.2 1,242.1 1,039.8 0.2 1997 337.5 613.9 721.8 2.8 1998 1,805.6 13,993.7 8,963.7 259.4 1999 2,128.6 3,698.9 5,342.3 0.3 2000 311.0 Part C The accuracy measurements for the exponential smoothing models are: Alpha 0.4 0.6 MSE 1,174 1,785 MAPE 14.1% 15.1% MPE 3.5% 6.8% Based on this the exponential smoothing model with alpha = 0.4 provides the better forecast.
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Homework 4 Solutions Page 2 of 5 Part D For alpha = 0.4 the residual autocorrelation is 0.270 and for alpha = 0.6 the residual autocorrelation is 0.547 (see Excel attachment for calculations). The residual autocorrelation is high for the alpha = 0.6 which is not desirable.
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This note was uploaded on 06/18/2011 for the course IEOR 4307 taught by Professor Dr.kosrowdehnad during the Summer '10 term at Columbia.

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HW03b_sol - Homework 4 Solutions Problem 4-13 Part A The forecast for the first quarter of 2000 based on an exponential smoothing average of 0.4 is

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