Question 1 - In this exercise you should calculate three types of averages, the absolute forecast error
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Question 1 - In this exercise you should calculate three types of averages, the absolute forecast error and the mean absolute deviation (MAD) and explain the accuracy.
- Calculate the moving average for 3 months.
- Calculate the weighted moving average (WMA) for 3 months.
- Calculate the forecast using exponential smoothing.
- Calculate the absolute forecast error for each method
- Calculate the MAD for each method.
- Determine which method is the most accurate and explain why
Weighting assumptions:
- Month 1 = 0.5
- Month 2 = 0.3
- Month 3 = 0.2
Smoothing constant = 0.35
Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
Historical Actual Values | Moving Average (3 month) | WMA (3 month) | ExpSmth Sm consant = 0.35 | Absolute forecast error | MAD | Absolute forecast error | MAD | Absolute forecast error | MAD | |
January | 1000 | |||||||||
February | 1450 | |||||||||
March | 1289 | |||||||||
April | 1374 | |||||||||
May | 1500 | |||||||||
June | 1654 | |||||||||
July | 1700 | |||||||||
Total |
how to do question 2
Question 1b - Which of the forecasts is the most accurate and why?
Related Book For
Probability And Statistics
ISBN: 9780321500465
4th Edition
Authors: Morris H. DeGroot, Mark J. Schervish
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