Consider the following time series T 1 2 3 4 5 6 7 Yt 120 11

Consider the following time series:
T 1 2 3 4 5 6 7
Yt 120 110 100 96 94 92 88

a) Construct a time series plot. What type of pattern exists in the data?

b) Use Excel Solver or LINGO to find the parameters for the line that minimizes MSE this time series.

c) What is the forecast for t = 8?

Please show ALL work.

Solution

There exist an exponential decrease curve.

Data      C2
Length    7
NMissing 0

Fitted Trend Equation

Yt = 120.639 * (0.95294**t)

Accuracy Measures

MAPE 2.49422
MAD   2.53410
MSD   9.15616

Forecasts

Period Forecast
8        82.0369