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BUS 173 Lecture 11

BUS 173 Lecture 11. Simple Moving Averages. Simple Average Advantage? Disadvantage? Regression Advantage? Disadvantage? Deviation MAD/MAPE MSE. Covered in Last Class. Conditions Stable time series (No significant trends) Good for short-range forecasts Two forms

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BUS 173 Lecture 11

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  1. BUS 173 Lecture 11 Simple Moving Averages

  2. Simple Average • Advantage? • Disadvantage? • Regression • Advantage? • Disadvantage? • Deviation • MAD/MAPE • MSE Covered in Last Class

  3. Conditions • Stable time series (No significant trends) • Good for short-range forecasts • Two forms • Simple Moving Averages (SMA) • 3 period • 4 period • 5 period Smoothing methods

  4. 3 period M.A = 4 period M.A = 5 period M.A = Find out the 3, 4, 5 MA’s for the next example Simple Moving Averages

  5. Example 1 (Lecture 10 Ex)

  6. Which MA is the best possible forecast in this situation? • How do we find out the effectiveness of the forecasts • MAPE • MSE Assessing the Forecast

  7. Example 2 – Gasoline Sales

  8. Graph for Example 2

  9. Use of SMA

  10. End of Lecture Thank You

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