Problem 6-07 (Algorithmic) Refer to the gasoline sales time series data in the g

Question

Problem 6-07 (Algorithmic)

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

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

b. 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 =

c. 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 8.214.

Week Sales (1000s of gallons) 1 18 2 21 3 19 4 22 5 19 6 16 7 22 8 19 9 21 10 19 11 16 12 23

Explanation / Answer

from above below is 4 -week moving average:

and 5 week moving average:

MSE for four-week moving average =8.625

and MSE for five-week moving average =6.886

as MSE for five-week moving average is the lowest; therefore five-week moving average appears to be the best number of weeks of past data to use in the moving average computation

Week Sales (1000s of gallons)(A) 4 Period Moving Average(F) (A-F)2 1 18 2 21 3 19 4 22 5 19 20 1.0000 6 16 20.25 18.0625 7 22 19 9.0000 8 19 19.75 0.5625 9 21 19 4.0000 10 19 19.5 0.2500 11 16 20.25 18.0625 12 23 18.75 18.0625 Total; 69.0000 mean=total/8 8.625

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