Chapter 14

Question 1

forecasting:

simple moving avg. method

Answer 1

• based on a rolling avg. of past values for a series
• easy to use
• based on avg. of past values, so it lags a trend (if one exists) and tends to dampen/ smooth turning points, where seasonality or other irregular events
• larger qty of average points = greater chance a random event is eliminated

Question 2

forecasting:

exponential smoothing method

Answer 2

fcst created using values from most recent period (extrapolation?)

• fcst lags a trend in the series (if there is one)– like simple moving avg. method
• mild trend = minimal lag effect, due to using most recent period values– unlike moving avg. method