5-21 A college student has just completed her junior year. The following table s

Question

5-21 A college student has just completed her junior year. The following table summarizes her grade-point average (GPA) for each of the past nine quarters: Year Semester GPA Freshman Fall 2.4 Winter 2.9 Spring 3.1 Sophomore Fall 3.2 Winter 3.0 Spring 2.9 Junior Fall 2.8 Winter 3.6 Spring 3.2 Forecast the student’s GPA for the fall semester of her senior year by using a three-period moving average. Forecast the student’s GPA for the fall semester of her senior year by using exponential smoothing with = 0.2 =0.2. Which of the two methods provides a more accurate forecast? Justify your answer.

Explanation / Answer

Year Semester GPA MA Exp Smoothing Dev_MA Abs Dev_MA Dev_Exp Smoothing Abs Dev_Exp Smoothing Freshman Fall 2.4 2.4 Winter 2.9 2.8 2.4 0.1 0.1 0.5 0.5 Spring 3.1 3.066666667 2.5 0.033333333 0.033333333 0.6 0.6 Sophomore Fall 3.2 3.1 2.62 0.1 0.1 0.58 0.58 Winter 3 3.033333333 2.736 -0.033333333 0.033333333 0.264 0.264 Spring 2.9 2.9 2.7888 0 0 0.1112 0.1112 Junior Fall 2.8 3.1 2.81104 -0.3 0.3 -0.01104 0.01104 Winter 3.6 3.2 2.808832 0.4 0.4 0.791168 0.791168 Spring 3.2 2.9670656 0.2329344 0.2329344 3.01365248 MAD 0.138095238 MAD 0.3862928 As we can see that the MAD is less for 3 period moving average, it is a better forecasting method than exponential smoothing

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