Forecasting Methods

Calculate and answer parts a through d. Include all calculations and spreadsheets in your post. Explain why the moving average method was used instead of another forecasting method. What might be another forecasting method that could prove to be just as useful?

The figures below indicate the number of mergers that took place in the savings and loan industry over a 12-year period.

Year    Mergers      Year                         Mergers

2000      46            2006                            83

2001      46            2007                            123

2002      62            2008                             97

2003    45             2009                            186

2004    64             2010                            225

2005    61              2011                           240

a. Calculate a 5-year moving average to forecast the number of mergers for 2012.

b. Use the moving average technique to determine the forecast for 2005 to 2011. Calculate measurement error using MSE and MAD.

c. Calculate a 5-year weighted moving average to forecast the number of mergers for 2012. Use weights of 0.10, 0.15, 0.20, 0.25, and 0.30, with the most recent year weighted being the largest.

d. Use regression analysis to forecast the number of mergers in 2012.