The Monthly Sales Revenue (In Hundreds of Dollars) of a Company

Essay

The monthly sales revenue (in hundreds of dollars) of a company for one year is listed below. $$\begin{array} { | l | c | } \hline \text { Month } & \text { Sales } ( \mathbf { \$ 1 0 0 s } ) \\\hline \text { January } & 12,354 \\\hline \text { February } & 13,657 \\\hline \text { March } & 14,536 \\\hline \text { April } & 13,478 \\\hline \text { May } & 16,590 \\\hline \text { June } & 19,790 \\\hline \text { July } & 17,987 \\\hline \text { August } & 18,657 \\\hline \text { September } & 19,765 \\\hline \text { October } & 18,678 \\\hline \text { November } & 20,678 \\\hline \text { December } & 23,675 \\\hline\end{array}$$
a. Compute MSE using the most recent value as the forecast for the next period. What is the forecast for the next month?
b. Compute MSE using the average of all the data available as the forecast for the next period. What is the forecast for the next month?
c. Which method appears to provide the better forecast?