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2. The U.S. Census Bureau publishes data on factory orders for all manufacturing,

durable goods, and nondurable goods industries. Shown here are factory orders

in the United States from 1987 through 1999 ($ billion).

a. Use these data to develop forecasts for the years 1992 through 1999 using a

5-year moving average.

b. Use these data to develop forecasts for the years 1992 through 1999 using a

5-year weighted moving average weight the most recent year by 6, the previous

year by 4, the year before that by 2, and the other years by 1.

c. Compute the errors of the forecasts in parts (a) and (b) and observe the differences

in the errors of the forecasts.

Year Factory Orders ($ billion)

1987 2512.7

1988 2739.2

1989 2874.9

1990 2934.1

1991 2865.7

1992 2978.5

1993 3092.4

1994 3356.8

1995 3607.6

1996 3749.3

1997 3952.0

1998 3949.0

1999 4137.0

a. A 4-month average is the mean of previous 4 months. If those values are xm-1, xm-2, xm-3, xm-4, xm-5, then the formula is

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Therefore, the forecast for period 1992 is: (Unit: $billion)

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The forecast for period 1993 is

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The forecast for period 1994 is

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The forecast for period 1995 is

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The forecast for period 1996 is

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The forecast for period 1997 is

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The forecast for period 1998 is

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The forecast for period 1999 is

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|Time period |Value |Forecast |

|1987 |2512.7 = x1 | |

|1988 |2739.2 = x2 | |

|1989 |2874.9 = x4 | |

|1990 |2934.1 = x4...