Problem 1[10points] Solve the problem 12.168 (Volatility of Foreign Stocks) page 814.
Problem 2[10points] The quarterly sales in thousands of cases of Sparkling Water (SW) in the Coop for the last
eight years starting from 2011 are given in Sparkling.sav. The data is divided to two sets. The training which
has 7 years and then one year for the test.
a) Describe the main components of this time series
b) Using the appropriate decomposition method, provide the trend equation and the seasonal indices.
Describe the effect of third quarter on the annual sport sales.
Trend
Seasonal indices
c) Using the decomposition method, predict the sales for the year 2018. Using the test data, calculate the
MPAE.
Year 2018 Quarter 1 Quarter 2 Quarter 3 Quarter 4
Forecast
d) Which exponential smoothing method would you suggest? Explain. Give the appropriate exponential
smoothing parameters.
e) Use method d) to compute the forecast for year 2018. Using the test data, calculate the MPAE.
Year 2018 Quarter 1 Quarter 2 Quarter 3 Quarter 4
Forecast
f) Which method would you recommend for prediction? Use the recommended method to forecast the
sales for year 2019.
Year 2019 Quarter 1 Quarter 2 Quarter 3 Quarter 4
Forecast
Sample Solution