Stat week 3

Exponential Smoothing

The Gross National Product for each quarter for the Years 1998-2001 are shown in the table below.

Year Quarter GNP (Billions of Dollars) 1998 1 8635

2 8700 3 8802 4 8975

1999 1 9113 2 9196 3 9334 4 9546

2000 1 9671 2 9846 3 9893 4 9983

2001 1 10038 2 10081 3 10109 4 10188

a. Find the optimal value of alpha for the exponential smoothing method with this data set with the objective of minimizing MAD.

b. What is the GNP forecast for the first quarter of 2002? c. What is the MAD?