Consider the following annual series on the number of hiking boots sold at an ou

Question

Consider the following annual series on the number of hiking boots sold at an outdoor store in the last six months: The 2-month moving average for period 4 is 19.00 22.50 20.50 24.50 25.00 The 2-month moving average forecast for period 7 is 19.00 22.50 24.50 20.50 25.00 The Mean Square Error (MSE) for the 2-month moving average is 1.06 9.42 11.38 7.81 44.50 Using a smoothing constant of 0.3, the exponential smoothing values to be used as forecasts for periods 6 is 19.58 20.84 23.79 22.60 23.45 Using a smoothing constant of 0.3, the exponential smoothing values to be used as forecasts for periods 7 is 19.58 20.84 20.89 22.60 23.45

Explanation / Answer

a)

2-day moving average for period-4 = (Boots sold in period-3 + period-2)/2 = (20+18)/2 = 19.00 (Option a)

b)

2-day moving average forecast for period-7 = (Boots in period 6 + period 5) /2 = (20+21)/2 = 20.5 (Option d)

c)

(Option c)

For part d and e,

Ft = 0.3*A(t-1) + 0.7*F(t-1)

Month Hiking Boots (in 100s)
(A) 2 day moving (F) (A-F) (A-F)^2 1 20 2 18 3 20 19 1 1 4 25 19 6 36 5 20 22.5 -2.5 6.25 6 21 22.5 -1.5 2.25 7 20.5 45.5 MSE = 11.375

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