Calculate three forecasts using the following data. First, for periods 4 through 10, develop the exponentially smoothed forecasts using a forecast for period 3 (F₃) of 120.0 and an alpha of 0.3. Second, calculate the three-period moving-average forecast for periods 4 through 10. Third, calculate the weighted moving average for periods 4 through 10, using weights of .60, .30, and .10. Calculate the mean absolute deviation (MAD) and the cumulative sum of forecast error (CFE) for each forecasting procedure. Which forecasting procedure would you select? Why?
Definitions:
Housing Prices
The amount of money required to buy homes in a particular area, which can fluctuate based on demand, location, and economic conditions.
Housing Bust
A rapid and significant decline in the housing market, characterized by falling home prices and increased foreclosures.
Regulatory Policies
Laws and rules instituted by governments to control or manage certain activities, industries, or market practices.
Mal-investment
Investment in wrong or unproductive activities usually due to poor information, misaligned incentives, or manipulation of prices.
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