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You are employed at a nonprofit as an industrial and management engineer. You have access to historical monthly donation amounts. The nonprofit is interested in

You are employed at a nonprofit as an industrial and management engineer. You have access to historical monthly donation amounts. The nonprofit is interested in forecasting their monthly donations for the upcoming year so that they can plan what type of services they will offer in their local community. Use the initialization procedures that are the default in the R functions used in class notes.

Month Period Donations_Dollars
19-Jan 1 5126
19-Feb 2 3031
19-Mar 3 4621
19-Apr 4 1296
19-May 5 3075
19-Jun 6 2053
19-Jul 7 2098
19-Aug 8 5376
19-Sep 9 2467
19-Oct 10 2441
19-Nov 11 3324
19-Dec 12 5596
20-Jan 13 3623
20-Feb 14 3048
20-Mar 15 5499
20-Apr 16 5258
20-May 17 2473
20-Jun 18 2719
20-Jul 19 2661
20-Aug 20 3079
20-Sep 21 2468
20-Oct 22 2468
20-Nov 23 1195
20-Dec 24 1216
21-Jan 25 4901
21-Feb 26 5353
21-Mar 27 6116
21-Apr 28 5869
21-May 29 1069
21-Jun 30 3089
21-Jul 31 1621
21-Aug 32 2181
21-Sep 33 3046
21-Oct 34 5315

  1. Conduct a 3-period moving average and provide your donation forecast for months 35 to 40.
  2. Conduct a simple exponential smoothing forecast and provide your donation forecast for months 35 to 40. Also, provide the 80% prediction interval and the 95% prediction intervals lower and upper bounds of your forecasts. What value(s) for this methods input parameters do you recommend? In your own words, explain your recommendation and how you obtained it.
  3. Use the largest subset of periods that is a fair comparison for both methods to provide the mean squared error (MSE) forecasting measure for your 3-period moving average and your exponential smoothing forecasting methods. Identify over what periods these MSE values are calculated over.
  4. Do you recommend using the 3-period moving average, the simple exponential smoothing forecast or neither of them to plan your nonprofits service commitments for the 6 months? In your own words, justify your answer. To receive full credit, you must justify your answer using quantitative evidence.

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