# Answer the below questions

Homework Assignment ( class presentation attached)

You will find it more convenient to copy and paste the data given into an Excel sheet and do your work there.

Question-1 (25 pts)

You are a consultant who has been asked to provide a forecast of the US index of industrial production. Using the monthly data given below:

• Compute forecasts for periods 5 through 15 using 4-month moving averages. (10 pts)
• Compute forecasts for periods 5 through 15 using 4-month weighted moving averages with weights 0.4 (newest period), 0.3, 0.2, and 0.1 (oldest period). (10 pts)
• How do these two sets of forecasts compare in terms of accuracy? Compute (i) the Mean Error (bias), (ii) Mean Absolute Deviation (MAD) and (iii) the Mean Absolute Percent Deviation (MAPD).What are these measures telling you? (15 pts)
 Period US Index of Industrial Production 1 108 2 108 3 110 4 106 5 108 6 108 7 105 8 100 9 97 10 95 11 95 12 92 13 95 14 95 15 98

Question-2 (25 pts)

For the same data in Question-1, assume that you use exponential smoothing.

• Compute forecasts for periods 2 through 15 using exponential smoothing with a = 0.2.Assume a forecast of 100 units for period 1. (5 pts)
• Compute forecasts for periods 2 through 15 using exponential smoothing with a = 0.8.Assume a forecast of 100 units for period 1. (5 pts)
• How do these two sets of forecasts compare in terms of accuracy?Compute (i) the Mean Error (bias), (ii) Mean Absolute Deviation (MAD) and (iii) the Mean Absolute Percent Deviation (MAPD). What are these measures are telling you? (15 pts)
• Use trend estimation method to forecast the GNP values for the next two years. (10 pts)
• What is the growth rate of this country’s GNP over this period? (5 pts)
• Use the trend equation to calculate forecasts from period 1 to period 15.How accurate wouldthese forecasts have been?Calculate Mean Absolute Deviation.Is there any bias to these forecasts? (10 pts)

Question-3 (25 pts)

The following data represent the GNP of a country in constant 1960 prices for the years 1950–1964.

 Date Period (t) GNP values 1950 1 50.6 1951 2 53.6 1952 3 55.3 1953 4 56.8 1954 5 59.3 1955 6 62.4 1956 7 66.0 1957 8 69.3 1958 9 71.2 1959 10 73.4 1960 11 78.6 1961 12 82.8 1962 13 88.5 1963 14 93.6 1964 15 99.8

Question-4 (25 pts)

The following data pertain sales of space heaters in a retail store.

• Plot the time series.What time series components do you see? (5 pts)
• Using multiplicative decomposition develop forecasts for space heaters for the four quarters of next year (year 4).(20 pts)
 Year Quarter Sales 1 1 826 1 2 480 1 3 725 1 4 436 2 1 1041 2 2 773 2 3 876 2 4 545 3 1 1135 3 2 952 3 3 1141 3 4 727