EXAMPLE$-$MAD WITH HISTORICAL DATA

The table below provides actual sales for years $1$ through $7.$ The firm uses a three$-$year moving average to

make forecasts.

a$.$ What is the forecast for year $8?$

$F_8=\frac{A_5+A_6+A_7}{3}=\frac{100+900+800}{3}=600$

b$.$ What is the MAD based on these data?

MAD$=\frac{200+200+633+333}{4}=341\mathrm{.}5$

c$.$ Suppose the company uses a $4$ year MA instead of a $3$ year MA for forecasting, what is the new MAD?