Problem 4

A company sells air conditioners to four regions labelled as East, South, North, and West. The company has gathered historical data of the monthly demand for air conditioners over the past 9 years (since 2013)- see file Data_Pb4.xlsx.

a. Explore the time series for each region.

i. Plot the data for each region as time series.

ii. Determine whether these exhibit trend and/or seasonality?

iii. If/Where relevant, calculate seasonal indexes for each region.

iv. State with justification for each region what would be appropriate forecasting methods to forecast monthly demand for the remainder of 2023.

b. Apply two appropriate forecasting methods for each region to forecast monthly demand remainder of 2023.

i. For each region, compare performance of the two methods using MAE, RMSE, and MAPE.

ii. Check and comment on forecasting errors for randomness and autocorrelation.

iii. Using the best method, produce monthly forecast for each region remainder of 2023.

c. In the report, describe your findings.