The file P14_50.xlsx contains five years of monthly data for a company. The first variable is Time (1–60). The second variable, Sales1, has data on sales of a product. Note that Sales1 increases linearly throughout the period, with only a minor amount of noise. (The third variable, Sales2, will be used in the next problem.) For this problem, use the Sales1 variable to see how the following forecasting methods are able to track a linear trend.

a. Forecast this series with the moving averages method with various spans such as 3, 6, and 12. What can you conclude?

b. Forecast this series with simple exponential smoothing with various smoothing constants such as 0.1, 0.3, 0.5, and 0.7. What can you conclude?

c. Repeat part b with Holt’s method, again for various smoothing constants. Can you do much better than in parts a and b?