Eco 309-Assignment 2 due by midnight on Monday, February 28, 2022(Chapter 4)
Total points 125. Submit through D2L in Word/Excel format, single or multiple files. Must show
your work, answer all parts of the question, and write necessary explanations to earn full points.
You have to use Excel to solve this numerical problem (project).
Part (A)- 65 points
The data below is for 20 periods of sales in $millions.
tSales(Y)
110
211
314
414
512
615
718
816
916
1017
1116
1220
1324
1422
1520
1624
1726
1828
1928
2026
21
Plot the time series data. Forecast for the 21st period using simple exponential smoothing with
alpha 0.3 and 0.8 and plot the actual 20 period values with forecasted values. Compare the two
forecasts using MSE and RMSE. Also calculate the errors and plot the errors for the two
forecasts. Comment on the plots (about stationarity). Do you see systematic underestimation?
Now perform the forecast using Holt’s two parameter model with alpha = 0.3 and beta = 0.6.
Plot the Holt’s forecast with actual values. Also calculate the MSE for Holt’s forecast. Is it better
than the simple exponential smoothing forecasts?  Plot the errors for Holt’s model. Does it look
nearly stationary.
Part (B)- 60 points
For the data below (Production = Y in million tons) plot the data and comment whether you see a
seasonal pattern. Perform Holt-Winters’ seasonal forecast using alpha = 0.5, beta = 0.4 and
gamma  = 0.8.  Make forecasts for 2007-q1 and 2007-q2 using Holt-Winters’ model. Calculate
the errors and MSE and RMSE. Plot the errors and comment on the plot.
Year-q
period=
t Y
2001-1179
2001-22105
2001-3395
2001-4489
2002-1595
2002-26137
2002-37132
2002-48116
2003-19115
2003-210153
2003-311142
2003-412127
2004-113142
2004-214201
2004-315179
2004-416164
2005-117200
2005-218243
2005-319230
2005-420216
2006-121222
2006-222280
2006-323265
2006-424255
2007-1
2007-2