BUS 173 Lecture 12

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# BUS 173 Lecture 12 - PowerPoint PPT Presentation

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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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
• MSE
So far…

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

Different periods have different weights

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

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

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
Thank You