THESE THREE QUESTIONS GO TOGETHER (Question 3, 4, 5)

Question 3

Given the following data, use exponential smoothing with =0.1 and =0.6 to generate forecasts for periods 2 through 6. Use MAD and MSE to decide which of the two models produce a better forecast. (Assume the forecast for Period 1 is 17)

Period	Actual	Forecast
1	14	17
2	16
3	16
4	11
5	12
6	17

What is the forecast for Period 6 when you use =0.6? (Express it to 2 decimal places)

Answer: _

Question 4

What is the value of Mean Absolute Deviation (MAD) when =0.6? Calculate to 3 decimal places. (Use all forecasted values from Period 1 to Period 6.)

Answer: _

Question 5

Which method produces a better forecast? (Use all forecasted values from Period 1 to Period 6.)

Select one:

A. When we use MSE, =0.1 produces a better forecast.

B. =0.1 produces a better forecast measured both by MAD and MSE.

C. When we use MAD, =0.1 produces a better forecast.

D. =0.6 produces a better forecast measured both by MAD and MSE.