A Time Series for the Years 1990-1995 Is Shown Below

question 126

Essay

A time series for the years 1990-1995 is shown below. $$\begin{array} { | c | c | } \hline \text { Year } & y _ { t } \\\hline 1990 & 125 \\1991 & 115 \\1992 & 120 \\1993 & 126 \\1994 & 140 \\1995 & 122 \\\hline\end{array}$$ a. Develop forecasts for the years 1996-1998, with the following smoothing constant values:
w = 0.2, w = 0.5 and w = 0.6.
b. Compare each of the three sets of forecasts above with the actual values for 1996-1998 given in the following table, and compute the MAD for each model. Which model is best? $$\begin{array} { | c | c | } \hline \text { Year } & y _ { t } \\\hline 1996 & 130 \\1997 & 125 \\1998 & 135 \\\hline\end{array}$$

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