Assignment Task: Boulanger Savings and Loan is proud of its long tradition in Winter Park, Florida. Begun by Michele Boulanger 22 years after World War II, the S & L has bucked the trend of financial and liquidity problems that has repeatedly plagued the industry. Deposits have increased slowly but surely over the years. Boulanger believes it is necessary to have a long range strategic plan for her firm, including a 1 year forecast and preferably even a 5 year forecast for deposits. She examines the deposit data and the gross state product over the same 44 years. The resulting data are in the following table:
|
Year
|
Deposits
|
GPS
|
|
1
|
0.25
|
0.4
|
|
2
|
0.24
|
0.4
|
|
3
|
0.24
|
0.5
|
|
4
|
0.26
|
0.7
|
|
5
|
0.25
|
0.9
|
|
6
|
0.3
|
1
|
|
7
|
0.31
|
1.4
|
|
8
|
0.32
|
1.7
|
|
9
|
0.24
|
1.3
|
|
10
|
0.26
|
1.2
|
|
11
|
0.25
|
1.1
|
|
12
|
0.33
|
0.9
|
|
13
|
0.5
|
1.2
|
|
14
|
0.95
|
1.2
|
|
15
|
1.7
|
1.2
|
|
16
|
2.3
|
1.6
|
|
17
|
2.8
|
1.5
|
|
18
|
2.8
|
1.6
|
|
19
|
2.7
|
1.7
|
|
20
|
3.9
|
1.9
|
|
21
|
4.9
|
1.9
|
|
22
|
5.3
|
2.3
|
|
23
|
6.2
|
2.5
|
|
24
|
4.1
|
2.8
|
|
25
|
4.5
|
2.9
|
|
26
|
6.1
|
3.4
|
|
27
|
7.7
|
3.8
|
|
28
|
10.1
|
4.1
|
|
29
|
15.2
|
4
|
|
30
|
18.1
|
4
|
|
31
|
24.1
|
3.9
|
|
32
|
25.6
|
3.8
|
|
33
|
30.3
|
3.8
|
|
34
|
36
|
3.7
|
|
35
|
31.1
|
4.1
|
|
36
|
31.7
|
4.1
|
|
37
|
38.5
|
4
|
|
38
|
47.9
|
4.5
|
|
39
|
49.1
|
4.6
|
|
40
|
55.8
|
4.5
|
|
41
|
70.1
|
4.6
|
|
42
|
70.9
|
4.6
|
|
43
|
79.1
|
4.7
|
|
44
|
94
|
5
|
Required:
Q1. Using the exponential smoothing, with a=0.6, then trend analysis, and finally linear regression, discuss which forecasting model fits best for Boulanger's strategic plan. Justify the selection of one model over the other.
Q2. Carefully examine the data. Can you make a case for excluding a portion of the information? Why? Would that change your choice of model?