Error in a forecasting approach is the difference between the actual data values and the forecasted...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Error in a forecasting approach is the difference between the actual data values and the forecasted values of that period. It helps to determine which forecasting method is suitable and provide better results than others. Error measures that can be applied to optimize the results of various forecasting methods include: mean absolute deviation MAD, mean squared error MSE, and mean absolute percentage error MAPE, and other measures like tracking signal for keeping/determining the values within a certain control limit. MAD = (sum of absolute forecast values/number of error periods) MSE (sum of the squares of error for each period) MAPE = (sum of absolute percentage values)/number of error periods. Tracking signal-recurring sum of forecast error/MAD These error measures provide different values for different methods applied to the forecasting problem. The smaller the error value, the more accurate and reliable will the forecast method. When the said methods of forecasting are used to obtain the forecast values, one can calculate all the error measures to know which method provides optimal results. It can be noted that, exponential smoothing forecast with a smoothing constant can provide better results in general. But, it can be subjective to the data. Simple moving average method is easier, but may not provide better accuracy, due to the lack of recency. Thus, making right selection of the method with optimized outcomes can be possible with error measures. Here you say " Simple moving average method is easier, but may not provide better accuracy, due to the lack of recency." What is an alternative to a simple moving average? Error in a forecasting approach is the difference between the actual data values and the forecasted values of that period. It helps to determine which forecasting method is suitable and provide better results than others. Error measures that can be applied to optimize the results of various forecasting methods include: mean absolute deviation MAD, mean squared error MSE, and mean absolute percentage error MAPE, and other measures like tracking signal for keeping/determining the values within a certain control limit. MAD = (sum of absolute forecast values/number of error periods) MSE (sum of the squares of error for each period) MAPE = (sum of absolute percentage values)/number of error periods. Tracking signal-recurring sum of forecast error/MAD These error measures provide different values for different methods applied to the forecasting problem. The smaller the error value, the more accurate and reliable will the forecast method. When the said methods of forecasting are used to obtain the forecast values, one can calculate all the error measures to know which method provides optimal results. It can be noted that, exponential smoothing forecast with a smoothing constant can provide better results in general. But, it can be subjective to the data. Simple moving average method is easier, but may not provide better accuracy, due to the lack of recency. Thus, making right selection of the method with optimized outcomes can be possible with error measures. Here you say " Simple moving average method is easier, but may not provide better accuracy, due to the lack of recency." What is an alternative to a simple moving average?
Expert Answer:
Answer rating: 100% (QA)
Your explanation provides a clear overview of error measures used in forecasting and how they help determine the suitability and reliability of differ... View the full answer
Related Book For
Accounting for Decision Making and Control
ISBN: 978-0078025747
8th edition
Authors: Jerold Zimmerman
Posted Date:
Students also viewed these management leadership questions
-
can someone solve this Modern workstations typically have memory systems that incorporate two or three levels of caching. Explain why they are designed like this. [4 marks] In order to investigate...
-
The new line character is utilized solely as the last person in each message. On association with the server, a client can possibly (I) question the situation with a client by sending the client's...
-
1. Read the following article about the new circle with disney product and answer the following questions. in doing so, take on the role as the marketing manager responsible for the product and...
-
A compressor operates adiahatically with air entering at T and P\ with a molar flow rate A, The discharge pressure is F? and the compressor efficiency is >?. Estimate the power requirement of the...
-
The level of dissolved oxygen in water was measured every 2 hours in a river where industrial plants discharge processed waste. Each observation consists of four samples, from which the sample mean...
-
What does digestion accomplish?
-
The partners who own Jefferson Canoes Co. wished to avoid the unlimited personal liability of the partnership form of business, so they incorporated as Jefferson Canoes, Inc. The charter from the...
-
Suppose that an object hangs from three ropes which point in the directions of the vectors (2, 2, 1), (-2, -1, 2), and (4,0,3). (Assume that the positive z-axis points directly upward.) If the...
-
Write the inorder, preorder and postorder traversal sequences of the tree 2(a). Write the inorder, preorder and postorder traversal sequences of the tree. 40 45 34 55 14 48 13 15 47 49 Figure 1
-
Which incoterms would be applicable to them? please provide reasoning answer. Thank you! 1. You are a Brotherhood of Steel scribe in the Mohave Wasteland. You are trying to buy a piece of valuable...
-
Multiple Select Question Select all that apply Muller Company properly reports its investment in Kuhn Corporation utilizing the equity method. Subsequent to acquisition, Muller should adjust its...
-
fter the adjusting entries have been completed, the adjusted balance in the Deferred Revenue account represents: Multiple choice question. the amount of revenues for which goods or services were...
-
Julian Harris established Retrofit as a sole trader business. Five years later he is still using that structure but has been advised to consider other business structures. Should Julian stay as a...
-
f a company has an RTO of 4 hours, it means: a) The company aims to recover its operations within 4 hours after a disaster. b) The company performs data backups every 4 hours. c) The company must...
-
Follow the risk management model to evaluate risk for Coca Cola Company. Go through all the steps involved in the risk management model. Write a paper in which you need to address the following: 1....
-
When is the indirect pattern appropriate, and what are the benefits of using it?
-
Preventing a user who approves a configuration change from being the person who implements the change is an example of which of the following? A. Rotation of duties B. Least privilege C. Segregation...
-
A onedimensional heat conduction problem can be expressed by the following differential equation: where \(k\) is the thermal conductivity, \(T(x)\) is the temperature, and \(Q\) is heat generated per...
-
Consider a simply supported beam of length \(L\) subjected to a uniformly distributed transverse load \(p(x)=p_{0}\). Use the Rayleigh-Ritz method to determine the transverse deflection \(v(x)\) of...
Study smarter with the SolutionInn App