METHOD(8) involves the second of four naive ratio concepts and is more involved…

METHOD(8) involves the second of four naive ratio concepts and is more involved than was the previous method because the concept of lagging is once again implemented. METHOD(8) is called the Lagged, Adjacent Ratio Naive Method and infers that the forecast is related to the ratio that occurred L-time periods ago. The understanding of subscripts is very essential at this point, but hopefully you have mastered it by now.

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In Method(7), the Non-Lagged, Adjacent Ratio Naive method that was just completed, we said that the ratio change or proportion change which happened last will happen next. In this method, the Lagged, Adjacent Ratio Naive method we say that the ratio which happened some time ago will happen next. The “some time ago” value is the lag value and in this module it will be given to you.
Note that in this METHOD(8) as well as METHOD(7) the ratio in question related to two data values that were adjacent to one another. In methods (9) and (10) that will be presented next, the two data values that make up the ratio in question are not adjacent to one another (i.e., “non-adjacent”) and will have to be accounted for accordingly. That will be discussed in the modules that are coming up, but for now, let’s get started with Method Eight: the Lagged, Adjacent Ratio Naive method, (abbreviated as LAR), but more commonly referred to simply as “METHOD(8)”.
The logic to this specific method is as follows: The forecast for the next time period is equal to the actual value in the preceding time period times the ratio between the actual value that occurred L time periods ago and the one immediately preceding it. More simply this can be stated as follows:
“The ratio which happened some time ago will happen next.”

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This is my 3pt extra credit I really need! I have done the first two myself.
Due nov. 18 11pm but would like to have earlier if possible.
Analyze Ford Stock
Review the link (WILL GIVE THIS TO YOU IF INTERESTED –MSG ME ) on downloading small data sets and get fifteen closing prices for Ford (symbol F) starting with Monday January 9th, 2012. Once you have done that, use Methods 1, 2 and 3 on this data set (with lags of 2,3,4 and 5 where appropriate), and determine the TCBF, the BIAS, the TCUF, the MEMO forecast and the MSE for each one. Finally determine which of the six forecasting results is the best one and summarize your results in a MEMO similar to (but not exactly like!!!) that given in the web page example.
This is a BONUS problem and so it is optional. But if you do it and submit something credible to the dropbox under “FORD” then I will give you up to three extra credit points depending on how complete and/or accurate your submittal is. Let’s have this assignment due by the end of the third quiz.

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