The following data (stored in Coffee Prices Portugal) represent the retail price of coffee (in € / kg) in Portugal from 2004 to 2011:
............................. Retail Price
Year ........................ (€ / kg)
2004 ........................... 8.60
2005 ........................... 8.53
2006 ........................... 8.32
2007 ........................... 8.23
2008 ........................... 8.58
2009 ........................... 8.45
2010 ........................... 8.31
2011 ........................... 8.60
a. Plot the data.
b. Fit a three-year moving average to the data and plot the results.
c. Using a smoothing coefficient of W = 0.50, exponentially smooth the series and plot the results.
d. What is your exponentially smoothed forecast for 2012?
e. Repeat (c) and (d), using a smoothing coefficient of W = 0.25.
f. Compare the results of (d) and (e).
g. What conclusions can you reach about the retail price of coffee in Portugal?