Question: Data covering the most recent 30 days are given in the following table for the price per gallon of regular gasoline at a local station.

Data covering the most recent 30 days are given in the following table for the price per gallon of regular gasoline at a local station.

a. Compute a forecast for the next day's price by using a 3-day moving average. What is the forecast? What is the MSE for the last five observations?
b. Can you reduce the MSE for the last five observations by changing the moving-average window? (Try 4- to 10-day windows.)
c. Compute a forecast for the next day's price by using exponential smoothing with Î± = 0.25. What is the forecast? What is the MSE for the last five observations?
d. Can you improve the MSE for the last five observations by changing the smoothing constant Î±?

Day Price Day Price 2.53 16 2.46 2.35 17 2.60 3 1.91 18 2.10 4 2.20 19 2.01 1.77 20 2.14 3.26 21 2.03 1.63 22 2.68 2.73 23 2.59 2.41 24 2.99 10 2.72 25 2.94 11 2.87 26 1.77 12 1.49 27 2.62 13 2.92 28 3.19 14 3.53 29 3.01 15 2.74 30 2.10

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a The mooing average model is used by finding the average of the observations for most recent n terms Use following formula to calculate moving average Where The observation made in period t is repres... View full answer

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