In this problem, you are to test the validity of your forecasting model. Here ar

Question

In this problem, you are to test the validity of your forecasting model. Here are the forecasts for a model you have been using and the actual demands that occurred:

a. Use the method stated in the text to compute the MAD and tracking signal for each week. (Negative values should be indicated by a minus sign. Round your "Tracking Signal" to 1 decimal place and all other answers to the nearest whole number.)

b. Decide whether the forecasting model you have been using is giving reasonable results.

WEEK FORECAST ACTUAL 1 745 855 2 805 955 3 905 1,005 4 905 855 5 955 855 6 930 980

Explanation / Answer

1 - Deviation = Actual - Forecast

2 - Absolute Deviation = Absolute (Deviation)...This means if there are any negative values in Deviation, that should also be considered as a positive value.

3 - RSFE = Cumulative sum of Deviation

This means For week 1, RSFE = Deviation for week 1

For week 2, RSFE = Deviation for week 1 + Deviation for week 2

For week 3, RSFE = Deviation for week 1 + Deviation for week 2 + Deviation for week 3

Similarly for week 4, 5 and 6

4 - Sum of Absolute Deviation = Cumulative sum of Absolute Deviation

This means, for week 1, Sum of Absolute Deviation = Absolute Deviation for week 1

for week 2, Sum of Absolute Deviation = Absolute Deviation for week 1 + Absolute Deviation for week 2

for week 3, Sum of Absolute Deviation = Absolute Deviation for week 1 + Absolute Deviation for week 2 + Absolute Deviation for week

Similarly for week 4, 5 and 6.

5 - MAD = Sum of Absolute Deviation / Week

6 - TS = RSFE / MAD

Aswer 2

If all the values of TS Column are below +4 and above -4, then the forecasting model is acceptable.

Week Forecast Actual Deviation RSFE Absolute
Deviation Sum of
Absolute
Deviation MAD TS 1 745 855 110 110 110 110 110 1 2 805 955 150 260 150 260 130 2 3 905 1005 100 360 100 360 120 3 4 905 855 -50 310 50 410 102.5 3.03921 5 955 855 -100 210 100 510 102 2.05882 6 930 980 50 260 50 560 93.3 2.78670

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