FILE Consider the following sample data, consisting of 20 observations. The data are also on the text website, labeled Exercise 18.2.

t 1 2 3 4 5 6 7 8 9 10 y t 27 35 38 33 34 39 40 38 48 35 t

11 12 13 14 15 16 17 18 19 20 yt 37 38 35 44 40 37 30 39 34 45

a. Construct a 5-period moving average and plot it along with the actual series. Comment on smoothing.

b. Use the 5-period moving average to make forecasts and compute the resulting MSE and MAD.

c. Make a forecast for period 21.

3 FILE Consider the following sample data, consisting of 20 observations. The data are also on the text website, labeled Exercise 18.3.

t 1 2 3 4 5 6 7 8 9 10 yt 12.9 12.6 11.1 14.8 11.9 12.9 12.1 13.6 11.9 9.0 t

11 12 13 14 15 16 17 18 19 20 yt 8.9 9.3 13.3 10.7 13.5 15.1 11.3 13.6 12.4 13.0

a. Plot the above series and discuss the presence of random variations.

b. Use the exponential smoothing method to make forecasts with α = 0.2. Compute the resulting MSE and MAD.

c. Repeat the process with α = 0.4.

d. Use the appropriate value of α to make a forecast for period 21.