Question 1
Determine the error for each of the following forecasts. Compute MAD and MSE.
PERIOD
VALUE
FORECAST
1
202
—
2
191
202
3
173
192
4
169
181
5
171
174
6
175
172
7
182
174
8
196
179
9
204
189
10
219
198
11
Question 2
The U.S. Census Bureau publishes data on factory orders for all manufacturing, durable goods, and nondurable goods industries. Shown here are factory orders in the United States over a 13-year period ($ billion).
a. Use these data to develop forecasts for the years 6 through 13 using a 5-year moving average.
b. Use these data to develop forecasts for the years 6 through 13 using a 5-year weighted moving average. Weight the most recent year by 6, the previous year by 4, the year before that by 2, and the other years by 1.
c. Compute the errors of the forecasts in parts (a) and (b) and then the MAD. Which forecast is better?
YEAR
FACTORY ORDERS ($ billion)
1
2,512.70
2
2,739.20
3
2,874.90
4
2,934.10
5
2,865.70
6
2,978.50
7
3,092.40
8
3,356.80
9
3,607.60
10
3,749.30
11
3,952.00
12
3,949.00
13
Question 3
The “Economic Report to the President of the United States” included data on the amounts of manufacturers’ new and un?lled orders in millions of dollars. Shown here are the ?gures for new orders over a 21-year period. Use Excel to develop a regression model to ?t the trend effects for these data. Use a linear model and then try a quadratic model. How well does either model ?t the data?
YEAR
TOTAL NUMBER OF NEW ORDERS
1
55,022
2
55,921
3
64,182
4
76,003
5
87,327
6
85,139
7
99,513
8
115,109
9
131,629
10
147,604
11
156,359
12
168,025
13
162,140
14
175,451
15
192,879
16
195,706
17
195,204
18
209,389
19
227,025
20
240,758
21
243,643
4,137.00
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