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BUS 173 Lecture 12

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WMA. BUS 173 Lecture 12. After the second mid, we have looked into: Simple Average Regression Moving Average 3 period 4 period 5 period Accuracy check MAD/MAPE MSE. So far…. You have decided to use Simple moving average, for 3 periods. Calculate the MSE and MAPE for the method.

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Presentation Transcript
so far

After the second mid, we have looked into:

    • Simple Average
    • Regression
    • Moving Average
      • 3 period
      • 4 period
      • 5 period
    • Accuracy check
      • MAD/MAPE
      • MSE
So far…
slide3

You have decided to use Simple moving average, for 3 periods. Calculate the MSE and MAPE for the method.

Calculate the forecast for the next three days

weighted moving average wma

Different periods have different weights

  • Normally the recent period is given the higher weights.
    • Stock Price
    • National Income
    • Weather Forecasts
Weighted Moving Average (WMA)
wma 2

Determining weights and periods:

    • Depends on the person who is calculating the forecast
    • Normally 3 – 5 periods are chosen
  • To carry out a proper WMA forecasting, you need to have a dialogue with the decision maker
WMA - 2
weights to use

Focus on Recent Values

    • Recent one has 50%
    • T -2 has a weight of 30%
    • T -3 has a weight of 20%
  • Further focus on Recent Values
    • Recent one has 70%
    • T – 2 has a weight of 20%
    • T – 3 has a weight of 10%
  • How do you determine which forecast is the best?
Weights to Use
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