The ABC Floral Shop from problem 3 is considering fitting various forecasting models on the first seven days of demand and using the second seven days as a hold-out sample for comparing the prediction accuracy of the models. They have decided to use = .25, but arent sure what starting value of forecast, F1, to use.

a. Try values of F1 = 160, F2 = 170, and F3 = 180 to determine the best exponential model for the first seven days using the minimum total absolute deviation as the criterion. You may modify the spreadsheet from problem 8 for the calculations.

b. Compare the best model from part a to a three-period moving average model on the second set of data. Which one has the smallest sum of absolute errors?

c. What principles does this problem illustrate?

Table of ABC Floral Shop is the following. The ABC Floral Shop sold the following number of geraniums during the last two weeks: Day 1 2 3 4 5 6 7 Demand 200 134 147 165 183 125 146 Day 8 9 10 11 12 Demand 154 182 197 132 163 157 169 13 14