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.