The Consumer Price Index (CPI), which is published by the U.S. Bureau of Labor Statistics, is a measurement that reflects changes in consumer prices over time. The following data show the CPI over a 10-year period using 1982 as the base year with the CPI = 100. These data can also be found in the Excel file CPI.xlsx.

Year CPI Year CPI 2003 184.0 2008 215.3 2004 188.9 2009 214.5 2005 195.3 2010 218.1 2006 201.6 2011 224.9 2007 207.3 2012 229.6 Based on: U.S. Bureau of Labor Statistics data.

a. Forecast the CPI for 2013 using exponential smoothing with trend adjustment, and set a = 0.3 and b = 0.5.

b. Calculate the MAD for the forecast in part a.

AppendixLO1