HW02_sol - Homework 2 Solutions Page 1 of 4 Problem 3- 13...

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Unformatted text preview: Homework 2 Solutions Page 1 of 4 Problem 3- 13 Marriages Trend 2,200 2,250 2,300 2,350 2,400 2,450 2,500 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Marriages(1,000s) Marriages First Difference 150 100 50 50 100 150 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year MarriagesFirstDifference (1,000s) The marriages trend indicates a downward trend as marriages per year decreased by 134,000 from 1985 to 2004 or a 5.6% drop in marriages. The fitted regression line indicates a slope of -7,934/year The marriages first difference indicates an increase in volatility as time progresses. Problem 3-16 Part A The MAPE ( Mean Absolute Percentage Error ) takes into consideration the magnitude of the values being forecast: TRUE since it turns the errors into percent errors by dividing the errors by their actual values. Part B The MSE ( Mean Squared Error ) and RMSE ( Root Mean Squared Error ) penalize large errors: TRUE since it squares the errors. Homework 2 Solutions Page 2 of 4 Part C The MPE ( Mean Percentage Error ) is used to determine whether a model is systematically predicting too high or too low: TRUE since if the MPE > 0 (< 0) the model is predicating too low (too high)....
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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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HW02_sol - Homework 2 Solutions Page 1 of 4 Problem 3- 13...

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