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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

which one is best and why

five quarter moving averages method is better than three quarter moving averages method. because it has smaller RMSE as compared to the three quaerter moving averages RMSE's.

and if you still dont understand then watch lecture NO.12 from 12th minute to the 20th minute.

hope you will get the satisfying explanation.

regards. NOMI GILL

Nomi baki to same hy lekin 2nd part ka RMSE differ aa raha mera 43.84 hy

can you explain how?
if your total of (A-F)^2 is 603.9456. then it must b 6.6219.

Dear Nomi how to get (F) Averages .?

Part (A): demand forecast by using three period moving averages method:

 Months Firm’s actual market share          (A) Three quarter moving averages          (F) (A-F) (A-F)^2 Jan.13 25.6 Feb.13 24.7 Mar.13 21.3 Apr.13 13.9 23.87 -9.97 99.4009 May.13 12.6 19.97 -7.37 54.3169 Jun.13 18 15.93 2.07 4.2849 Jul.13 21.5 14.83 6.67 44.4889 Aug.13 22.3 17.37 4.93 24.3049 Sep.13 30.7 20.6 10.1 102.01 Oct.13 15 24.83 -9.83 96.6289 Nov.13 13.8 22.67 -8.87 78.6769 Dec.13 22.6 19.83 2.77 7.6729 Jan.14 17.13 Total=            511.7852

Tariq how to get 17.13 jan 2014 value .

Part (B): demand forecast by using five period moving average methods:

 Months Firm’s actual market share              (A) Five quarter moving averages         (F) A-F (A-F)^2 Jan.13 25.6 Feb.13 24.7 Mar.13 21.3 Apr.13 13.9 May.13 12.6 Jun.13 18 19.62 -1.62 2.6244 Jul.13 21.5 18.1 3.4 11.56 Aug.13 22.3 17.46 4.84 23.4256 Sep.13 30.7 17.66 13.04 170.0416 Oct.13 15 21.02 -6.02 36.2404 Nov.13 13.8 21.5 -7.7 59.29 Dec.13 22.6 20.66 1.94 3.7636 Jan.14 20.88 TOTAL =     306.9456

Calculation of RMSE:

RMSE = 6.6219

please tell me wrong ya right

its 100% right

handouts main dekho na wahan py moving avereges k total ko  9 aor 7 sy divide kiya hoa hy same waisy hi kiya hy jaisy example hy to us hisab sy mera to ye hi ans hy

madam. you didn't take the square root of your anser if u take the square root of 43.84. you will get an answer 6.6219 exactly.
as you did in the first part and got the answer RMSE 7.54.

thankxxxx alot for the clarification may ALLAH PAAK BLESS U :)

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