Shown below is data on factory orders for all manufacturing, durable goods, and non-durable goods industriesover a 13-year period ($ billion).
a ) Use thisdata to develop forecasts for the years 6 through 13 using a 5-year moving average.
b) Use thisdata to develop forecasts for the years 6 through 13 using a 5-year weighted moving average. Weight the most recent year by 6, the previous year by 4, the year before that by 2, and the other years by 1.
c) Compute the errors of the forecasts in parts (a) and (b) and then the mean absolute deviation (MAD). Which forecast is better?
| Year |
Factory orders ($ billions) |
| 1 |
2512.7 |
| 2 |
2739.2 |
| 3 |
2874.9 |
| 4 |
2934.1 |
| 5 |
2865.7 |
| 6 |
2978.5 |
| 7 |
3092.4 |
| 8 |
3356.8 |
| 9 |
3607.6 |
| 10 |
3749.3 |
| 11 |
3952 |
| 12 |
3949 |
| 13 |
4137 |