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# Assignment No1 Open Date 28-11-14 Due Date 04-12-14

MANAGERIAL ECONOMICS (ECO404)
ASSIGNMENT No.01
The Case:
Allah has bestowed Pakistan with large reserves of minerals and gemstones. Gemstones
are mostly available in Swat, Dir, Mansehra, Kohistan, and Peshawar District.Gemstones
Corporation of Pakistan was established in 1979 to develop the gemstones sector in
Pakistan but this corporation was liquidated in 1997. Nowadays a number of groups are
functioning in this sector. All Pakistan Commercial Exporters Association of Rough &
Unpolished Precious and Semi-Precious Stones (APCEA) is one of them. APCEA buys
gemstones from local collectors and then send to wholesalers all over the country. APCEA
has the data on the number of gemstones (in thousands) ordered during the past twelve
months and wanted to develop forecasting model.You are required to help APCEA in
developing forecasting model. Data is given as follows.
Month
Firm’s Actual
Market Share
(A)
Jan-13 25.6
Feb-13 24.7
Mar-13 21.3
Apr-13 13.9
May-13 12.6
Jun-13 18
Jul-13 21.5
Aug-13 22.3
Sep-13 30.7
Oct-13 15
Nov-13 13.8
Dec-13 22.6
Requirement:
A- Use a three period moving average method to forecast the demand in January of 2014.
Also calculate the RMSE (Root-mean-square error) for this method. Use the table above.
B- Use a five period moving average method to forecast the demand in January of 2014. Also
calculate the RMSE for this method. Use the table above to carry out your calculations.
C-Compare both the methods and tell which one is good for forecasting?
(Marking scheme: 10+10+5)

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### Replies to This Discussion

aoa

cn any body guide me how to write the formula for moving average and RMSE in word. i dn't understand how to write various symbolz in the formula.

thnkx

some one send me solution of assignment eco404

### Calculating a 5-Year Moving Average Example

Sample Problem:Calculate a five-year moving average from the following data set:

 Year Sales (\$M) 2003 4 2004 6 2005 5 2006 8 2007 9 2008 5 2009 4 2010 3 2011 7 2012 8

The mean (average) sales for the first five years (2003-2007) is calculated by finding the mean from the first five years (i.e. adding the five sales totals and dividing by 5). This gives you the moving average for 2005 (the center year) = 6.4M:

 Year Sales (\$M) 2003 4 2004 6 2005 5 2006 8 2007 9

(4M + 6M + 5M + 8M + 9M) / 5 = 6.4M

The average sales for the second subset of five years (2004 – 2008), centered around 2006, is 6.6M:
(6M + 5M + 8M + 9M + 5M) / 5 = 6.6M

The average sales for the third subset of five years (2005 – 2009), centered around 2007, is 6.6M:
(5M + 8M + 9M + 5M + 4M) / 5 = 6.2M

Continue calculating each five-year average, until you reach the end of the set (2009-2013). This gives you a series of points (averages) that you can use to plot a chart of moving averages. The following Excel table shows you the moving averages calculated for 2003-2012 along with a scatter plot of the data:

to calculate 5 months moving average for jan 14
u hv to add values from the month of aug - dec, then divide the ans with 5. then u will get the value for jan 14 or the next month.

so what is answer for part C .. which method is better ?

five moving average method is best

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