Problem #4.9, do (a), (b), and (c); skip (d) from text and instead answer the fo
ID: 458091 • Letter: P
Question
Problem #4.9, do (a), (b), and (c); skip (d) from text and instead answer the following:
d. Determine a 3-period weighted Moving Average forecast with 5 as the weight for current
period, 3 as the weight one period ago, and 2 as weight for two periods ago. Compute MAD
and MSE for this forecast and compare it the one found in (c). Would the weighted MA
forecast give more accurate forecast? Explain.
4.9Lenovo uses the ZX-81 chip in some of its laptop computers. The prices for the chip during the past 12 months were as follows: PRICE PER PRICE PER MONTH MONTH anuary euary.67 August March April May June CHIP 1.80 1.83 1.70 September 1.70 1.65 190 November 1.70 1.75 CHIP $1.80 July 1.85 October 1.87 December a) Use a 2-month moving average on all the data and plot the b) Use a 3-month moving average and add the 3-month plot to c Which is better (using the mean absolute deviation): the d) Compute the forecasts for each month using exponential averages and the prices. the graph created in part (a) 2-month average or the 3-month average? smoothing, with an initial forecast for January of $1.80. Use = .1, then = .3, and finally = .5. Using MAD, which is the best?Explanation / Answer
c) Based on MAD, 2 Moving Average is better than 3 Moving Average.
d) After computing the weighted moving average, the MAD for it is 0.076 which is slightly higher than 2-MA (0.075). However, it is better than 3 - MA
The method which forecasts the actual value closely is the best method. In this case 2-MA is better followed by Weighted average and then 3 - MA
Actual a) Forecast(2 - MA) b) Forecast (3 - MA) c) MAD for 2 MA c) MAD for 3-MA Jan $1.80 Feb $1.67 Mar $1.70 $1.74 $0.03 Apr $1.85 $1.69 $1.72 $0.17 $0.13 May $1.90 $1.78 $1.74 $0.13 $0.16 Jun $1.87 $1.88 $1.82 $0.00 $0.05 Jul $1.80 $1.89 $1.87 $0.09 $0.07 Aug $1.83 $1.84 $1.86 $0.00 $0.03 Sep $1.70 $1.82 $1.83 $0.12 $0.13 Oct $1.65 $1.77 $1.78 $0.12 $0.13 Nov $1.70 $1.68 $1.73 $0.03 $0.03 Dec $1.75 $1.68 $1.68 $0.08 $0.07 MAD $0.08 $0.09Related Questions
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