Smoothing constant provides the better forecast

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Reference no: EM13320430

Quarter/Year Utilization(%)

1/ 2003 82.5

2/ 2003 81.3

3/ 2003 81.3

4/ 2003 79.0

1/ 2004 76.6

2/ 2004 78.0

3/ 2004 78.4

4/ 2004 78.0

1/ 2005 78.8

2/ 2005 78.7

3/ 2005 78.4

4/ 2005 80.0

1/ 2006 80.7

2/ 2006 80.7

3/ 2006 80.8

a. Compute three- and four- quarter moving averages for this time series. Which moving average provides the better forecast for the fourth quarter of 2006?

b. Use smoothing constants of a=.4 and a=.5 to develop forecasts for the fourth quarter of 2006. Which smoothing constant provides the better forecast?

c. On the basis of the analysis in parts (a) and (b), which method - moving averages or exponential smoothing - provides the better forecast? Explain.

Reference no: EM13320430

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