Refer again to the gasoline sales time series data in the following table. Using

Question

Refer again to the gasoline sales time series data in the following table.

Using a weight of 1/2 for the most recent observation, 1/3 for the second most recent, and 1/6 for third most recent, compute a three-week weighted moving average for the time series. Use rounded for two decimal places values for intermediate calculations. Use minus sign for negative values.

Compute the MSE for the weighted moving average in part a. Do you prefer this weighted moving average to the unweighted moving average? Remember that the MSE for the unweighted moving average is 10.22. Round your answer to two decimal places.

MSE =  

Prefer the moving average here.

Week Sales (1000s of gallons) 1 18 2 22 3 20 4 26 5 18 6 17 7 21 8 19 9 23 10 23 11 16 12 24

Explanation / Answer

from above MSE =17.54

as MSE is less for  unweighted moving average ; therefore one must prefer  unweighted moving average

Week Sales Weighted Moving Forecast (Error)2 Average Forecast Error 1 18 2 22 3 20 4 26 20.33 5.67 32.11 5 18 23.33 -5.33 28.44 6 17 21.00 -4.00 16.00 7 21 18.83 2.17 4.69 8 19 19.17 -0.17 0.03 9 23 19.33 3.67 13.44 10 23 21.33 1.67 2.78 11 16 22.33 -6.33 40.11 12 24 19.50 4.50 20.25 Total 157.86 MSE=average= 17.54

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