Problem 3: Forecast Accuracy (8 points) Two months ago Katelyn and Christopher c
ID: 355921 • Letter: P
Question
Problem 3: Forecast Accuracy (8 points)
Two months ago Katelyn and Christopher created a forecast for sales of a new product. The product has been on the market for 5 weeks and below is the actual units sold compared with each forecast.
Week
Actual Sales (units)
Katelyn’s Forecast (units)
Christopher’s Forecast (units)
1
3,609
2,400
2,400
2
5,231
2,600
4,500
3
7,156
7,300
6,800
4
7,892
7,700
8,000
5
8,956
10,200
9,500
6
10,268
10,600
11,900
Calculate the MAPE for Katelyn’s forecast. (3 points)
Calculate the MAPE for Christopher’s forecast. (3 points)
Who had the better forecast? (2 points)
Week
Actual Sales (units)
Katelyn’s Forecast (units)
Christopher’s Forecast (units)
1
3,609
2,400
2,400
2
5,231
2,600
4,500
3
7,156
7,300
6,800
4
7,892
7,700
8,000
5
8,956
10,200
9,500
6
10,268
10,600
11,900
Explanation / Answer
MAPE = Sum of the absolute percentage errors for all the periods / number of periods
Where,
Absolute percentage error = (absolute error / actual value) 100
Absolute error = absolute value of error
Error = Actual value - forecasted value
A) Calculation of MAPE for Katelyn's forecast :
Using the above formula the errors, absolute errors and absolute percentage errors for all the periods are :
MAPE = (33.50%+50.30%+2.01%+2.43%+13.90%+3.23%)/6
= 105.37% / 6
= 17.56%
B) Calculation of MAPE for Christopher's forecast
Using the above formula the errors, absolute errors and absolute percentage errors for all the periods are
MAPE = (33.50%+13.97%+4.97%+1.37%+6.07%+15.89%)/6
= 75.77% / 6
= 12.63%
C) Christopher had the better forecast because it had a lower MAPE than KatelyKat forecast.
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