Date of Award
Master of Science in Cost Analysis
Department of Systems Engineering and Management
Jonathan D Ritschel, PhD.
This thesis examines the current method of forecasting foreign currency exchange rates for the annual US Air Force budget. Using 5 methods against the status quo of a center-weighted average, the paper evaluates the absolute percent error (APE) over three time periods extending from Fiscal Year (FY) 1979 to FY 2014. The results strongly indicate that four of the alternative methods outperform over the short term, and one method for all three time periods. Furthermore, a non-parametric comparison of the median APE demonstrates statistical similarities between the four methods over the short term, and allows for the Air Force to choose which method to exercise for future forecasting. Overall, the paper recommends using a private firm s forecasts to decrease the median APE by 3.36% and avoiding $36.1 million opportunity cost.
DTIC Accession Number
Gardner, Nicholas R., "Forecasting Foreign Currency Exchange Rates for Air Force Budgeting" (2015). Theses and Dissertations. 145.