Lenovo uses the ZX-81 chip in some of its laptop computers. The prices for the chip during the past 12 months
were as follows:
MONTH
PRICE PER
CHIP MONTH
PRICE PER
CHIP
January $1.80 July 1.80
February 1.67 August 1.83
March 1.70 September 1.70
April 1.85 October 1.65
May 1.90 November 1.70
June 1.87 December 1.75

a) Use a 2-month moving average on all the data and plot the
averages and the prices.
b) Use a 3-month moving average and add the 3-month plot to
the graph created in part (a).
c) Which is better (using the mean absolute deviation): the
2-month average or the 3-month average?
d) Compute the forecasts for each month using exponential
smoothing, with an initial forecast for January of $1.80. Use a
= .1, then a = .3, and finally a = .5. Using MAD, which a
is the best?