Assignment 3: Forecasting
Introduction
This assignment assesses your understanding of the forecasting methods you have learned this week and gives you an opportunity to compare and evaluate the results of different forecasting methods.
Instructions
Submit your answers to all questions in a Word document. Download the data sets and use Excel to solve the problems.
Question: Download Download Downloadthe data on thermostat sales.
Calculate both the three-month and the five-month averages for these data.
Plot the data to examine the possible existence of trend and seasonality.
Prepare the following two (2) separate forecasting models to examine the thermostat’s sales data using monthly data:
An exponential smoothing model (α=0.38, smoothing constant for the level)
Holt’s model (α=0.04, smoothing constant for the level; β=0.07, smoothing constant for the trend)
d. Examine the accuracy of the forecast given by each model ( four models: MA 3, MA 5, Simple Exponential smoothing and Holt’s Method) by calculating the root mean square error (RMSE) for each during the historical period.
e. Which model does minimize the RMSE? Carefully explain which characteristics of the original data caused one of these models to minimize the RMSE.
f. Using Holt’s method forecast 12 months of thermostat sales for 2017.
Hints:
Part e: In this task, you will calculate four Root Mean Square Errors (RMSE), one for each model (MA3, MA5, Simple Exponential Model, and Exponential Model with Trend-Holt’s Method). The MA3 and MA5 models are used to forecast stationary data (without trend). The Simple Exponential Model is used to forecast stationary data (without trend), while the Exponential Model with Trend-Holt’s Method is used to forecast non-stationary data (with trend).
Visualizing the data will help you detect any data patterns such as trend, seasonality, or stationary data with random errors. This will assist you in answering part e of the task.
Part f: In the lecture notes, the embedded video on Holt’s Method did not explain how to forecast future data using Holt’s Method. To forecast with Holt’s Method, use the following algebraic form:
Ht+m = Ft+m * Tt
Here, Ht+m represents Holt’s forecast value for period t+m. Please watch the video I made to understand how to use this equation for forecasting.
Submission
Submit your answers in a Word document.
Submit the Excel files to show your calculations.
Include the relevant graphs of actual and forecast values of the series. Please do not forget to title your graph.
Submit your calculations and answers in a 1–3-page document and spreadsheet to the Dropbox by Day 7 of this week.
Evaluation Criteria
All forecasting assignments together make up 24% of the total course score. This assignment is worth 40 points. Here is the rubric Download rubricfor the assignment.
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View Rubric
Forecasting Assignment Rubric
Forecasting Assignment Rubric
CriteriaRatingsPts
Evidence the problem was understoodview longer description
6 pts
Exemplary Performance
Shows very good understanding of the problem and its solution technique4 pts
At or Above Average
Shows sound understanding of the problem2 pts
At or Below Average
Shows limited understanding of the problem0 pts
Low Performance
Shows very limited or no understanding of the problem/ 6 pts
Technique
view longer description
10 pts
Exemplary Performance
Very effective use of technique; uses forecasting techniques efficiently while justifying the solution7.5 pts
At or Above Average
Effective use of technique; uses appropriate technique, but some parts of the technique or summary statistics left unexplained5 pts
At or Below Average
Limited use of appropriate techniques; is not precise in using forecasting technique2.5 pts
Low Performance
Very limited use of technique; uses unsuitable techniques or simple manipulation of the data in attempting to find a solution/ 10 pts
Answer
view longer description
10 pts
Exemplary Performance
All correct answers, all requested explanations perfectly presented7.5 pts
At or Above Average
Most answers correct, but incomplete explanations or incorrect reasoning5 pts
At or Below Average
Most answers incorrect, appropriate techniques2.5 pts
Low Performance
Incorrect answers, inappropriate techniques/ 10 pts
Completion
view longer description
8 pts
Exemplary Performance
All parts of the assignment completed6 pts
At or Above Average
Most parts of the assignment completed4 pts
At or Below Average
Some parts of the assignment completed2 pts
Low Performance
Few to no parts of assignment completed/ 8 pts
Organization and Neatness
view longer description
6 pts
Exemplary Performance
Clear organization with few or no grammar or spelling errors4 pts
At or Above Average
Clear organization with some grammar or spelling errors2 pts
At or Below Average
Clear organization with significant grammar and spelling errors0 pts
Low Performance
Unclear organization with significant grammar and spelling errors/ 6 pts
Total Points: 0
The post Assignment 3: Forecasting
Introduction
This assignment assesses your understand appeared first on Scholars Hub Blog.
