59 Given the following issorical dnta and wigs of s ioe the mest recent perid 3

Question

59 Given the following issorical dnta and wigs of s ioe the mest recent perid 3 or the second mos ect perioda four (4)? or thet period whut is tie weighod mving average ioroca Period Vales 175 190 srid als 220 2 A) 184.00 B) 204.50 C) 230.50 D) 23200 E 206.50 60. Two different forecasting techniques were used to forecast demand for cases of botled water. Actual demand and the two forecasts are as follows. Compute the MAD for each forecast Forecasted Demand El 64 68 75 70 74 72 73 70 Which statement is true? A) The best MAD is (4) indicating F2 is the best forecasting model. B) The best MAD is (5) indicating F2 is the best forecasting model. C) The best MAD is (2) indicating FI is the best forecasting model. D) The best MAD is (3) indicating Fl is the best forecasting model. E) Insufficient data to make a determination

Explanation / Answer

59 ) Weighted Average Forecast formula

Ft = Wt-1*Dt-1 + Wt-2*Dt-2 + Wt-3*Dt-3

In the given Problem , Wt-1 = 0.6 , Wt-2 = 0.3 & Wt-3 = 0.1

F4 = W3*D3 + W2*D2 + W1*D1 = 0.6*220 + 0.3*190 + 0.1*175 = 206.5

Answer E ) 206.5

60)

MAD = Sum of Absolute Error/ Number of Period

Error = Ft - Dt

Absolute Error = Absolute value of (Ft - Dt )

Find Error and Absolute error of each Period for both the forecasting type

MAD for F1 = (2+7+2+1)/4 = 12/4 = 3

MAD for F2 = (4+7+1+4)/4 = 16/4 = 4

Hence MAD for F1 is less than MAD for F2 forecasting technique

Answer D) The best MAD is (3) indicating F1 is best forecasting model.

Forecasted Demand Error Absolute Error Period Demand F1 F2 F1 F2 F1 F2 1 68 66 64 2 4 2 4 2 75 68 68 7 7 7 7 3 70 72 69 -2 1 2 1 4 74 73 70 1 4 1 4

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