Forecasting and Business Analysis

Start with some data:

Date

Total earnings (male)

Nov.1983 362.00

Feb.1984 370.60

May.1984 383.80

Aug.1984 386.20

Nov.1984 389.50

Feb.1985 392.70

May.1985 397.20

Aug.1985 403.10

Nov.1985 413.90

Feb.1986 422.70

May.1986 425.50

Aug.1986 437.20

Nov.1986 446.30

Feb.1987 444.50

May.1987 450.90

Aug.1987 457.00

Nov.1987 470.00

Feb.1988 474.90

May.1988 481.70

Aug.1988 486.20

6302.0 Average Weekly Earnings,

Australia TABLE 3. Average Weekly

Earnings Of Employees, Australia

(Dollars) - Original

Set p = 0.5 and find your forecasts for the time period of interest

Once you have found your RMSE or evaluation tool, go to Solver

And impose the appropriate constraints:

Go back and check your p-value, which should have changed. You have now minimized the error terms by choice of p, which provides you with the best naive 2 forecast.