Harlen Industries has a simple forecasting model: Take the actual demand for the

Question

Harlen Industries has a simple forecasting model: Take the actual demand for the same month last year and divide that by the number of fractional weeks in that month. This gives the average weekly demand for that month. This weekly average is used as the weekly forecast for the same month this year. This technique was used to forecast eight weeks for this year, which are shown below along with the actual demand that occurred.

     The following eight weeks show the forecast (based on last year) and the demand that actually occurred:

a. Compute the MAD of forecast errors. (Round your answers to 2 decimal places.)

b. Using the RSFE, compute the tracking signal. (Round your answers to 2 decimal places. Negative values should be indicated by a minus sign.)

c. Based on your answers to parts a and b, comment on Harlen’s method of forecasting.

WEEK FORECAST
DEMAND ACTUAL
DEMAND 1 140 137 2 145 133 3 155 156 4 145 166 5 132 186 6 142 176 7 144 190 8 145 210

Explanation / Answer

The error of forecasting is as follows:

(A) Mean absolute deviation

Calculation is as follow

Week 1 MAD = 3/1 = 3

Similarly for week 8 MAD = 236/8 = 29.5

(B)Tracking signal using RSFE

Calculation is as follows

Week 1 TS = -3/3 = -1

Simmilarly Week 8 TS = 206/ 29.5 = 6.98

(C) yes the forecast depicted by Harlen shoish be considered good. As this method of forecasting errors take into consideration the RSFE and mad method to track singal issues in goods.

Week forecast demand actual demand deviation 1 140 137 -3 2 145 133 -12 3 155 156 1 4 145 166 21 5 132 186 54 6 142 176 34 7 144 190 46 8 145 210 65

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.