Sharon Johnson, sales manager for the Alvarez-Baines Company, is trying to choose between two methods for forecasting sales that she has been using during the past five months. During these months, the two methods obtained the forecasts shown below for the company’s most important product, where the subsequent actual sales are shown on the right.
(a) Calculate and compare MAD for these two forecasting methods.
(b) Calculate and compare MSE for these two forecasting methods.
(c) Sharon is uncomfortable with choosing between these two methods based on such limited data, but she also does not want to delay further before making her choice. She does have similar sales data for the three years prior to using these forecasting methods the past five months. How can these older data be used to further help her evaluate the two methods and choose one?

  • CreatedSeptember 22, 2015
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