In Exercise 13.46, the mean absolute deviation was introduced as a measure of forecasting accuracy. Another measure is mean squared error* (MSE), which is a measure of the average size of the

prediction errors in squared units: where et is the residual for period t and n is the number of available residuals.

(a) Compute MSE for the residuals from the 1-week, 2-week, 3-week, 4-week, 5-week, and 6-week moving-average models determined in Exercise 13.45, part (c).

(b) Plot the MSE values against the moving-average span values of 1, 2, 3, 4, 5, and 6. Describe the behavior of the MSE values versus the span values. For the butter series, at what moving-average span value is MSE smallest?


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