Chapter 13.7, Problem 27P

The file P13_27.xlsx contains yearly data on the proportion of Americans under the age of 18 living below the poverty level.

1. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why?
2. b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1.
3. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Create a chart of the series with the forecasts superimposed from this optimal smoothing constant. Does it make much of an improvement over the model in part b?
4. d. Write a short report to summarize your results. Considering the chart in part c, would you say the forecasts are “good”?