Quant decision making
Using the following data:
Week Sales
1 105
2 135
3 120
4 105
5 90
6 120
7 145
8 140
9 100
10 80
11 100
For each of the following forecast methods, generate a forecast for Week 12 Sales along with MAE, MSE and MAPE:
- Naïve,
- Historical Average
- 4-Week Moving Average
- 4-Week Weighted Moving average with the following weights:
- a. Most recent week: 7
- b. 2nd most recent week: 5
- c. 3rd most recent week: 3
- d. 4th most recent week: 1
- Exponential Smoothing with alpha = 0.3
- Simple Linear Regression (*** Do not perform diagnostic tests. The x-variable will fail – ignore this.)
- Which of the above methods results in the best MAE? The best MSE? The best MAPE?
- Determine alpha for exponential smoothing that results in an MSE of exactly 505.
