# Solve 15 questions on decision theory

We received a test prep question bank to prepare for our final exam. I need solutions. This is not an assignment. This is a practice test questions.

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#### Solution Preview

Please check attachment

1.

Period Sales Moving average Absolute Error Squared Error

1 338

2 219

3 278 278.33 0.33 0.11

4 265 254 11 121

5 314 285.67 28.33 802.78

6 323 300.67 22.33 498.78

2.

Period Sales Moving average Absolute Error Squared Error

1 338

2 219 338

3 278 314.20 36.20 1310.44

4 265 306.96 41.96 1760.64

5 314 298.57 15.43 238.15

6 323 301.65 21.35 455.63

3.

For moving average, MSE=(0.11+121+802.78+498.78)/4=355.67 and for exponential smoothing, MSE=(1310.44+1760.64+238.15+455.63)/4=941.22. Since I prefer smaller MSE, moving average is the better method.

4.

Period Sales (Y) L B F

1 250 250 15

2 265 265 15 265

3 278 279.6 15 280

4 265 288.68 14.41 294.60

5 314 305.27 14.63 303.09

6 323 320.52 14.69 319.90

5.

Yes, trend component is significant because its p-value is 0 which is very small.

Yes, there is a seasonal trend if alpha is 0.10 because all p-values of quarters ...

#### Solution Summary

The solution gives detailed steps on solving 15 questions on decision theory. Lots of topics are covered.