Recall your retail time series data (from Exercise 3 in Section 2.10). a. Why is multiplicative seasonality necessary for this series? b. Apply Holt-Winters’ multiplicative method to the data....

Recall your retail time series data (from Exercise 3 in Section 2.10).

a. Why is multiplicative seasonality necessary for this series?

b. Apply Holt-Winters’ multiplicative method to the data. Experiment with making the trend damped.

c. Compare the RMSE of the one-step forecasts from the two methods. Which do you prefer?

d. Check that the residuals from the best method look like white noise.

e. Now nd the test set RMSE, while training the model to the end of 2010. Can you beat the seasonal naïve approach from Exercise 8 in Section 3.7?