An analyst must decide between two different forecasting techniques for weekly s
ID: 446907 • Letter: A
Question
An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is Ft = 125 + 2.2t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculations and final answers to 2 decimal places.)
An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is Ft = 125 + 2.2t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculations and final answers to 2 decimal places.)
Explanation / Answer
Linear trend Equation
Naive
Forecasting using Naive is better based on lowest MSE
t actual demand Forecast = 125 + (2.2t) Forecast Error = Actual - forecast Abs(Forecast Error) Cumulative Abs(Forecast Error) MAD = (Cumulative Absolute value of forecast error / n) (Forecast Error)^2 Cumulative((Forecast Error)^2) MSE = Cumulative((Forecast Error)^2) / n 11 144 149.2 -5.20 5.20 5.20 0.47 27.04 27.04 2.458182 12 145 151.4 -6.40 6.40 6.40 0.53 40.96 68 5.666667 13 150 153.6 -3.60 3.60 3.60 0.28 12.96 80.96 6.227692 14 143 155.8 -12.80 12.80 12.80 0.91 163.84 244.8 17.48571 15 157 158 -1.00 1.00 1.00 0.07 1 245.8 16.38667 16 152 160.2 -8.20 8.20 8.20 0.51 67.24 313.04 19.565 17 156 162.4 -6.40 6.40 6.40 0.38 40.96 354 20.82353 18 154 164.6 -10.60 10.60 10.60 0.59 112.36 466.36 25.90889 19 159 166.8 -7.80 7.80 7.80 0.41 60.84 527.2 27.74737 20 164 169 -5.00 5.00 5.00 0.25 25 552.2 27.61Related Questions
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