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moving averages and weighted moving averages

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1. Use the following time-series data to answer the given questions.
Time Period Value Time Period Value
1 27 6 66
2 31 7 71
3 58 8 86
4 63 9 101
5 59 10 97

a. Develop forecasts for periods 5 through 10 using 4-month moving averages.

b. Develop forecasts for periods 5 through 10 using 4-month weighted moving averages. Weight the most recent month by a factor of 4, the previous month by 2, and the other months by 1.

c. Compute the errors of the forecasts in parts (a) and (b) and observe the differences in the errors forecast by the two different techniques.

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Solution Summary

The solution shows how to build the moving averages and weighted moving averages models for the given data. Furthermore, the root mean squared error of two models are computed and compared.

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(c) We ...

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