The following data represents 15 quarters of manufacturing capacity utilization (in percentages)
Quarter/Year Quarter/year Utilization
1/2000 82.5 1/2002 78.8
2/2000 81.3 2/2002 78.7
3/2000 81.3 3/2002 78.4
4/2000 79.0 4/2002 80.0
1/2001 76.6 1/2003 80.7
2/2001 78.0 2/2003 80.7
3/2001 78.4 3/2003 80.8
4/2001 78.0
a. Evaluate three and four quarter moving average for this time series. Which moving average provides the better forecast for the fourth quarter of 2003?
b. Use smoothing constants of α=0.4 and α=0.5 to develop forecast for the fourth quarter of 2003. Which smoothing constant provides the better forecast?
c. Based on the analyses in parts a and b, which method - moving avg or exponential smoothing provides the better forecast? Explain.