Economics

Eco 309-Assignment 2 due by midnight on Monday, February 28, 2022(Chapter 4)

Total points 125. Submit through D2L in Word/Excel format, single or multiple files. Must show

your work, answer all parts of the question, and write necessary explanations to earn full points.

You have to use Excel to solve this numerical problem (project).

Part (A)- 65 points

The data below is for 20 periods of sales in $millions.

tSales(Y)

110

211

314

414

512

615

718

816

916

1017

1116

1220

1324

1422

1520

1624

1726

1828

1928

2026

21

Plot the time series data. Forecast for the 21st period using simple exponential smoothing with

alpha 0.3 and 0.8 and plot the actual 20 period values with forecasted values. Compare the two

forecasts using MSE and RMSE. Also calculate the errors and plot the errors for the two

forecasts. Comment on the plots (about stationarity). Do you see systematic underestimation?

Now perform the forecast using Holt’s two parameter model with alpha = 0.3 and beta = 0.6.

Plot the Holt’s forecast with actual values. Also calculate the MSE for Holt’s forecast. Is it better

than the simple exponential smoothing forecasts? Plot the errors for Holt’s model. Does it look

nearly stationary.

Part (B)- 60 points

For the data below (Production = Y in million tons) plot the data and comment whether you see a

seasonal pattern. Perform Holt-Winters’ seasonal forecast using alpha = 0.5, beta = 0.4 and

gamma = 0.8. Make forecasts for 2007-q1 and 2007-q2 using Holt-Winters’ model. Calculate

the errors and MSE and RMSE. Plot the errors and comment on the plot.

Year-q

period=

t Y

2001-1179

2001-22105

2001-3395

2001-4489

2002-1595

2002-26137

2002-37132

2002-48116

2003-19115

2003-210153

2003-311142

2003-412127

2004-113142

2004-214201

2004-315179

2004-416164

2005-117200

2005-218243

2005-319230

2005-420216

2006-121222

2006-222280

2006-323265

2006-424255

2007-1

2007-2

**Eco 309-Assignment 2 due by midnight on Monday, February 28, 2022(Chapter 4)**

Total points 125. Submit through D2L in Word/Excel format, single or multiple files. Must show your work, answer all parts of the question, and write necessary explanations to earn full points. You have to use Excel to solve this numerical problem (project).

__Part (A)- 65 points__

The data below is for 20 periods of sales in $millions.

t | Sales(Y) |

1 | 10 |

2 | 11 |

3 | 14 |

4 | 14 |

5 | 12 |

6 | 15 |

7 | 18 |

8 | 16 |

9 | 16 |

10 | 17 |

11 | 16 |

12 | 20 |

13 | 24 |

14 | 22 |

15 | 20 |

16 | 24 |

17 | 26 |

18 | 28 |

19 | 28 |

20 | 26 |

21 |

Plot the time series data. Forecast for the 21st period using simple exponential smoothing with alpha 0.3 and 0.8 and plot the actual 20 period values with forecasted values. Compare the two forecasts using MSE and RMSE. Also calculate the errors and plot the errors for the two forecasts. Comment on the plots (about stationarity). Do you see systematic underestimation? Now perform the forecast using Holt’s two parameter model with alpha = 0.3 and beta = 0.6. Plot the Holt’s forecast with actual values. Also calculate the MSE for Holt’s forecast. Is it better than the simple exponential smoothing forecasts? Plot the errors for Holt’s model. Does it look nearly stationary.

** Part (B)- 60 points **For the data below (Production = Y in million tons) plot the data and comment whether you see a seasonal pattern. Perform Holt-Winters’ seasonal forecast using alpha = 0.5, beta = 0.4 and gamma = 0.8. Make forecasts for 2007-q1 and 2007-q2 using Holt-Winters’ model. Calculate the errors and MSE and RMSE. Plot the errors and comment on the plot.

Year-q | period=t | Y |

2001-1 | 1 | 79 |

2001-2 | 2 | 105 |

2001-3 | 3 | 95 |

2001-4 | 4 | 89 |

2002-1 | 5 | 95 |

2002-2 | 6 | 137 |

2002-3 | 7 | 132 |

2002-4 | 8 | 116 |

2003-1 | 9 | 115 |

2003-2 | 10 | 153 |

2003-3 | 11 | 142 |

2003-4 | 12 | 127 |

2004-1 | 13 | 142 |

2004-2 | 14 | 201 |

2004-3 | 15 | 179 |

2004-4 | 16 | 164 |

2005-1 | 17 | 200 |

2005-2 | 18 | 243 |

2005-3 | 19 | 230 |

2005-4 | 20 | 216 |

2006-1 | 21 | 222 |

2006-2 | 22 | 280 |

2006-3 | 23 | 265 |

2006-4 | 24 | 255 |

2007-1 | ||

2007-2 |