In a forecasting model, at the end of period 13, the forecasted

In a forecasting model, at the end of period 13, the forecasted value for period 14 is 75. Actual value in the periods 14 to 16 are constant at 100. If the assumed simple exponential smoothing parameter is 0.5, then the MSE at the end of period 16 is

F₁₄ = 75, D₁₄ = 100
F₁₅ = F₁₄ + α(D₁₄ – F₁₄)
= 75 + 0.5 (100.75)
F₁₅ = 87.5
D₁₅ = 100
F₁₆ = 87.5 + 0.5 (100 – 87.5)
F₁₆ = 93.75

MSE =	∑e_i²
	n

Where e_i = D_i - F_i

MSE =	(100 - 75)² + (100 - 87.5)² + (100 - 93.75)²	= 273.44
	3