Month Demand MA$(3)$ Absolute Deviation MA$(4)$ Absolute Deviation

$117,966$

$218,656$

$319,765$

$418,67818,796118$

$520,67819,0331,64518,7661,912$

$619,70719,444$

$1.(15$ pts$)$ Use the moving average method $($N$=3)$ to forecast sales for each applicable period.

$2.(15$ pts$)$ Compute the mean absolute deviation $($MAD$).$ Intermediate steps shown in column D$.$

MAD $881$

$3.(10$ pts$)$ Calculate the mean aboste deviation using the moving average method $($N$=4).$

MAD $1,912$

$4.(5$ pts$)$ Which forecasting method is more accurate, MA$(3)$ or MA$(4)?$ Why?

MA$(3)$ is more accurate because the smaller the N is$,$ the more reactive it is$.$ Also, we are presented with only $5$ numbers in the data set, so a smaller N should be used for the most accuracy.

$5.(5$ pts$)$ Compared to the moving average method, do you think a forecasting method that corrects for trend and seasonality can provide better forecast? Why?

Hint. Please check whether the demand history shows trend or seasonality.