Consider the poverty level data in the file S02_44.xlsx.
a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think should be used for forecasting? Why?
b. Use simple exponential smoothing to forecast these data, using no holdout period and requesting three years of future forecasts. Use the default smoothing constant of 0.1.
c. Repeat part b, optimizing the smoothing constant. Make sure you request a chart of the series with the forecasts superimposed. Does the Optimize Parameters option make much of an improvement?
d. Write a short report to summarize your results. Considering the chart in part c, would you say the forecasts are adequate?