Consider the total production (and sales) of ice cream in Canada (in millions of litres) for the period 1995 until 2007 (from left to right)15:
341 r 331, 317, 315, 321, 273, 298, 311, 302, 302, 335, 320, 309
Fit a model to ice cream production data using each of the following techniques and forecast tire 2008 production in each case. Also, plot the two moving average forecasts and the actual, the two exponential smoothing forecasts and the actual, and the linear trend and the actual (three graphs altogether).
a. Two-year moving average.
b. Four-year moving average.
c. Exponential smoothing with smoothing constant = 0.2.
d. Exponential smoothing with smoothing constant = 0.4.
e. Linear trend (regression).
f. Just by observing the plots, which of the above techniques would you use to forecast the ice cream production and why? (Hint: Tire plot overall closest to actual demand will be most accurate).
g. Alternatively, compute the MAD for each forecasting technique and determine the most accurate technique.