BUSINESS FORECASTING

  The following table contains the forecasts obtained from applying a single exponential smoother (SES) to data on the University of Manchester's annual expenditure on stationery (millions of pounds). The smoothing parameter, , was estimated from the data. Only the information for 2010-2016 is reported in the table. The final year of the sample period 2010 2011 2012 2013 2014 2015 Forecast Year Observed Data 2010 2.00 2011 2.00 1.99 2012 2.00 1.99 1.98 2013 2.00 1.99 1.98 1.95 2014 2.00 1.99 1.98 1.95 1.93 2015 2.00 1.99 1.98 1.95 1.93 1.91 2016 2.00 1.99 1.98 1.95 1.93 1.91 NA a) Obtain the ‘root mean square error’ (RMSE) ‘mean absolute error’ (MAE), and 'mean error' (ME) accuracy measures for: (I) the h=2 fixed horizon forecasts and, (II) the 2012 fixed base forecasts. The observed value for 2016 is not yet available (NA in the above table). b) Give the values of the U statistics for the forecasts examined in a). Note that no further arithmetic calculation is required. Briefly explain why. c) State, with a brief explanation, the value of  that has been used for the smoother.