The U.S. Census Bureau publishes data on factory orders for all manufacturing, d

Question

The U.S. Census Bureau publishes data on factory orders for all manufacturing, durable goods, and nondurable goods industries. Shown here are factory orders in the United States over a 13-year period ($ billion).

(Round the answers to two decimal places.)

Use these data to develop forecasts for the years 6 through 13 using a 5-year moving average.

F13=

e13=

Use these data to develop forecasts for the years 6 through 13 using a 5-year weighted moving average.Weight the most recent year by 6, the previous year by 4, the year before that by 2, and the other years by 1. Compute the error of the forecast.

F13(weighted)=

e13(weighted)=

Year Factory Orders ($ billion) 1 2,512.7 2 2,739.2 3 2,874.9 4 2,934.1 5 2,865.7 6 2,978.5 7 3,092.4 8 3,356.8 9 3,607.6 10 3,749.3 11 3,952.0 12 3,949.0 13 4,137.0

Explanation / Answer

Compute 5 year moving average as follows:

F6=(2512.7+2739.2+2874.9+2934.1+2865.7)/5=2785.32

F7=(2739.2+2874.9+2934.1+2865.7+2978.5)/5=2878.48

F8=(2874.9+2934.1+2865.7+2978.5+3092.4)/5=3045.5

F9=(2934.1+2865.7+2978.5+3092.4+3356.8)/5=3180.2

F10=(2865.7+2978.5+3092.4+3356.8+3607.6)/5=3356.92

F11=(2978.5+3092.4+3356.8+3607.6+3952)/5=3551.62

F12=(3092.4+3356.8+3607.6+3952+3949)/5=3722.94

F13=(3356.8+3607.6+3952+3949+4137)/5=$3878.98 (ans)

e13=F13(observed)-F13(predicted)=4137-3878.98=$350.6036 (ans)

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F13 (weighted)=3949*6/13+3952*4/13+3749.3*2/13+3607.6*1/13

=$3893.2154 (ans)

e13=4137-3893.2154=$243.7846

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