Use the data in exercise 9.7 to answer these questions: a. Calculate the nave estimator, which is

Question:

Use the data in exercise 9.7 to answer these questions:

a. Calculate the naïve estimator, which is Q_t = Q_{t − 1}.

b. Calculate the two-period moving-average forecast.

c. Calculate the mean absolute deviation for the regression forecast, the naïve forecast, and the two-period moving-average forecast.

d. Which forecast seems to perform the best? Why?

Exercise 9.7

Because of fluctuations in insurance coverage, the average price paid out of pocket (P) by patients of an urgent care center varied, as the table shows. The number of visits per month (Q) also varied, and an analyst believes the two are related. The analyst also thinks the data show a trend. Run a regression of Q on P and Period to test these hypotheses. Then use the estimated parameters a, b, and c and the values of Month and P to predict Q (number of visits). The prediction equation is Q = a + (b × Month) + (c × P). Month 1 P Q 4 5 6 7 8 9 10 11 12 2 3 $21 $18 $15 $24 $18 $21 $18 $15 $20 $19 $24 $20 193 197 256 179 231 214