Question

The number of pizzas ordered on friday evenings between 5:30 and 6:30 at a pizza delivery location for the last 10 weeks is shown below. use exponential smoothing with smoothing constants of .2 and .8 to forecast a value for week 11. compare your forecasts using mse. which smoothing constant would you prefer?

Answer 1

For a smoothing constant of 0.2

Time period – 1 2 3 4 5 6 7 8 9 10

Actual value – 46 55 39 42 63 54 55 61 52

Forecast – 58 55.6 55.48 52.18 50.15 52.72 52.97 53.38 54.90

Forecast error - -12 -.6 -16.48 – 10.12 12.85 1.28 2.03 7.62 -2.9
The mean square error is 84.12

The mean forecast for period 11 is 54.38
For a smoothing constant of 0.8

Time period – 1 2 3 4 5 6 7 8 9 10

Actual value – 46 55 39 42 63 54 55 61 52

Forecast – 58 48.40 53.68 41.94 41.99 58.80 54.96 54.99 59.80

Forecast error - -12 6.60 -14.68 0.06 21.01 -4.80 0.04 6.01 -7.80The mean square error is 107.17

The mean forecast for period 11 is 53.56


Based on the MSE, smoothing constant of .2 offers a better model since the mean forecast is much better compared to the 53.56 of the smoothing constant of 0.8.