- Construct a time series plot. What type of pattern exists in the data?
|Quarter||Year 1||Year 2||Year 3|
- Use a multiple regression model with dummy variables as follows to develop an equation to account for seasonal effects in the data. Qtr1 = 1 if quarter 1, 0 otherwise; Qtr2 = 1 if quarter 2, 0 otherwise; Qtr3 = 1 if quarter 3, 0 otherwise.
- Compute the quarterly forecasts for next year based on the model developed in part b.
- Compare the three-period moving average forecast with the exponential smoothing forecast using α = 0.3. Which appears to provide the better forecast based on MSE?