Refer to the gasoline sales time series data in the given table. Compute four-we

Question

Refer to the gasoline sales time series data in the given table.

Compute four-week and five-week moving averages for the time series. If required, round your answers to two decimal places.

Compute the MSE for the four-week and five-week moving average forecasts. If required, round your intermediate calculations to four decimal places and round your final answers to three decimal places.

MSE for four-week moving average =

MSE for five-week moving average =

What appears to be the best number of weeks of past data (three, four, or five) to use in the moving average computation? Recall that MSE for the three-week moving average is 15.396.

Week Sales (1000s of gallons) 1 18 2 20 3 19 4 24 5 19 6 15 7 21 8 18 9 23 10 20 11 14 12 22

Explanation / Answer

Solution:

MSE for four-week moving average =14.23

MSE for five-week moving average =11.53

MSE for three-week moving average= 15.39

usually the Mean Squared moving average should be as low as possible thus 5 week moving average appers to be best.

Calculation : To calculate the moving average just add all the previous data and divide by no of data points use

example : for 4 week moving average we added the first 4 week and divided by 4.

(18 + 20 + 19 +24)/4=20.25. similarly other values are generated

other calculation

Week Sales 4 Period 5 Period Moving Average Moving Average 1 18 2 20 3 19 4 24 5 19 20.25 6 15 20.5 20 7 21 19.25 19.4 8 18 19.75 19.6 9 23 18.25 19.4 10 20 19.25 19.2 11 14 20.5 19.4 12 22 18.75 19.2

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