Month Value of Contract 3 Month Moving Average Forcast Alpha 0.

2 Forcast
1 240
2 350 240
3 230 328
4 260 273.333333333333 249.6
5 280 280 257.92
6 320 256.666666666667 275.584
7 220 286.666666666667 311.1168
8 310 273.333333333333 238.22336
9 240 283.333333333333 295.644672
10 310 256.666666666667 251.1289344
11 240 286.666666666667 298.22578688
12 230 263.333333333333 251.645157376
b.1 Compare a three-month moving average forecast with an exponential smoothing forecast. Use a
an alpha or smoothing constant of 0.2.

Based on the proceeding MSE values, the 3-Month moving acerage appear better; however, exponential
smoothing was penalized by inculding 2, which was difficult for any method to forcast; using only the errors
for the months 4 to 12, the MSE for esponential smoothing is 1632.72. Thus, exponential smoothing was
better considering months 4 to 12

c. What is the forecast for the next month using exponential smoothing with a alpha or smoothing constant
of 0.2?

3-Month 260
Alpha = .2 260.02
 a. 1. Construct a time series plot.
400

350

300

250
Value

200

150

100

50

0
ast. Use a 1 2 3 4 5 6 7 8 9 10 11 12
Month

a.2. What type of pattern exists in the data?

The data appear to have a horizontal pattern.

constant