Forecasting Models

Scott Armstrong, the managing editor of Your Horoscope magazine, needs to develop a forecasting system for monthly newsstand sales in order to schedule press runs. Sales in thousands of copies for the first 7 months of publication were:

Year Month Sales
2013 August 50
September 55
October 65
November 74
December 80
2014 January 76
February 86

Scott does not believe there is a seasonal pattern. He is considering three different forecasting models: three-period moving average, simple exponential smoothing with a = 0.7 , and time series regression (i.e., trend projection). Determine the best forecasting model among the above three methods, and develop a forecast for March 2014. Use the first four months as the warm-up sample period and the remaining months as the forecasting sample period. The criteria of measuring forecast accuracy to be used are Bias, MAD, MSE, and MAPE.