(Solved Homework): Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of…

Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of bottled water. Actual demand and the two sets of forecasts are as follows:

		PREDICTED DEMAND
Period	Demand	F1	F2
1	68	63	62
2	75	66	61
3	70	73	70
4	74	65	71
5	69	71	73
6	72	69	73
7	80	70	76
8	78	72	80

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a.	Compute MAD for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal place.)


MAD F1
MAD F2

(Click to select)F1F2None appears to be more accurate.

b.	Compute the MSE for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal places.)


MSE F1
MSE F2

(Click to select)F1F2None appears to be more accurate.

c.	In practice, either MAD or MSE would be employed to compute forecast errors. What factors might lead a manager to choose one rather than the other?

Either one might already be in use, familiar to users, and have past values for comparison. If (Click to select)control chartstracking signals are used, MSE would be natural; if (Click to select)tracking signalscontrol charts are used, MAD would be more natural.

d.	Compute MAPE for each data set. Which forecast appears to be more accurate? (Round your intermediate calculations to 2 decimal places and and final answers to 2 decimal places.)


MAPE F1
MAPE F2

(Click to select)F1F2None appears to be more accurate.

Expert Answer

Answer

$MAD= (1/n)sum left | Actual-Forecast right |$

$MSE=(1/(n-1))sum (Actual-Forecast)^{2}$

$MAPE = (1/n)*100*sum left | Actual-Forecast right |/Actual$

a) MAD F1 = 5.88

MAD F2 = 4.25

MAD F2 is more accurate

MSE F1= 49.29

MSE F2 = 39.71

MSE F2 is more accurate

c) If Control charts are used MSE would be natural , If tracking signals are ued MAD would be natural

d) MAPE F1 = 7.88%

MAPE F2 =5.79%

MAPE F2 to be more accurate

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