# Determine the pattern in the following four times series

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Time Series
1. Determine the pattern in the following four times series.
Time Series A Time Series B Time Series C Time Series D
Month Revenue Month Revenue Month Revenue Month Revenue
January \$13,000 January \$10,000 January \$15,000 January \$10,000
February \$12,000 February \$16,000 February \$14,000 February \$16,000
March \$12,000 March \$12,000 March \$16,000 March \$12,000
April \$11,000 April \$10,000 April \$18,000 April \$14,000
May \$13,000 May \$16,000 May \$19,000 May \$20,000
June \$10,000 June \$12,000 June \$17,000 June \$16,000
July \$15,000 July \$10,000 July \$18,000 July \$18,000
August \$12,000 August \$16,000 August \$20,000 August \$24,000
September \$11,000 September \$12,000 September \$22,000 September \$20,000
October \$14,000 October \$10,000 October \$24,000 October \$22,000
November \$10,000 November \$16,000 November \$23,000 November \$28,000
December \$14,000 December \$12,000 December \$25,000 December \$24,000
Horizontal
1. For the following horizontal data use all methods to forecast from June to November.
Month Operating Cost Weight Month Operating Cost Weight
March \$50,000 2 July \$50,000 4
April \$40,000 3 August \$30,000 5
May \$60,000 4 September \$60,000 3
June \$70,000 2 October \$40,000 2
a) Naïve & Average
b) Moving Averages (k=3)
c) Weighted Moving Average (k=3, See data for weights)
2. Calculate error and mean error (MFE, MAE, MAPE) for each forecasting method in last
question. Only use the forecasts from June to October for error calculations.
3. Use the exponential smoothing method and find the optimal smoothing constant for the data
from question 1. Give answer to two decimal places. (Excel Required)
Trend
1. Given the first four years of sales for a new company, what will sales be in the fifth year?
2. Find MSE for the first four years of sales. Could the value of MSE get smaller by changing
the values of b1 and b0? Why or why not?
3. Would this be a realistic method of forecasting to find sales after 20 years? Why or why not?
Year Sales
1 \$1,500,000
2 \$1,900,000
3 \$2,400,000
4 \$2,700,000
Seasonal (Excel Required)
1. Using the data below, show how forecasts would change if one person assumed a seasonal
pattern (no trend) and the other used just trend. Was either person correct?
2. Show how the forecast would have changed if they used the correct method based on the
data’s true pattern. Is there any error between actual and forecasted values? Why not?
Year 1 Units Sold Year 2 Units Sold Year 3 Units Sold Year 4 Units Sold
Q1 3000 Q1 4000 Q1 5000 Q1 6000
Q2 4000 Q2 5000 Q2 6000 Q2 7000
Q3 2000 Q3 3000 Q3 4000 Q3 5000
Q4 5000 Q4 6000 Q4 7000 Q4 8000

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