The following table provides the Dow Jones Industrial Average (DJIA) opening index
value on the first working day of 1994 through 2013.
YEAR DJIA
2013 13,104
2012 12,392
2011 11,577
2010 10,431
2009 8,772
2008 13,262
2007 12,460
2006 10,718
2005 10,784
2004 10,453
2003 8,342
2002 10,022
2001 10,791
2000 11,502
1999 9,213
1998 7,908
1997 6,448
1996 5,117
1995 3,834
1994 3,754
Use Excel 2013, Excel QM or QM Windows to analyze the data, print out the summary output and attach it to your submission.
a) Develop a trend line and use it to predict the opening DJIA index value for years
2014, 2015 and 2016. Find the MSE for this model
b) Use exponential smoothing with trend adjustment to forecast the opening DJIA for 2014. Use ? = 0.8 and ? = 0.2.
c) Compare the MSE for this technique with the MSE for the Trends line and comment on the difference.