please answer only question $3$Suppose that you work for a U$.$S$.$ senator who is contemplating writing a bill that would

put a national sales tax in place. Because the tax would be levied on the sales revenue of

retail stores, the senator has asked you to prepare a forecast of retail store sales for year

$8,$ based on data from year $1$ through year $7.$ The data are:

$($c$1$p$2)$ Year Retail Store Sales

$1$ $$1,225$

$21,285$

$31,359$

$41,392$

$51,443$

$61,474$

$71,467$

wil$73648\_$ch$01.$qxd $11/6/089$:$50$ AM Page $53$

$54$ Chapter One

a$.$ Use the first naive forecasting model presented in this chapter to prepare a forecast

of retail store sales for each year from $2$ through $8.$

b$.$ Prepare a time$-$series graph of the actual and forecast values of retail store sales

for the entire period. $($You will not have a forecast for year $1$ or an actual value for

year $8.)$

c$.$ Calculate the root$-$mean$-$squared error for your forecast series using the values for

year $2$ through year $7.$

$3.$ Use the second naive forecasting model presented in this chapter to answer parts

$($a$)$ through $($c$)$ of Exercise $2.$ Use P $0\mathrm{.}2$ in preparing the forecast. Which model do

you think works the best? Explain why. $($c$1$p$3)$answer part $3$