Question: Please explain and show all work. Moving average Calculate the sales using 3, 4 and 6 month moving average values. Calculate the Mean Absolute Deviation
Please explain and show all work.
Moving average
Calculate the sales using 3, 4 and 6 month moving average values.
Calculate the Mean Absolute Deviation (MAD) for the 3, 4, and 6 month values. [MAD= average(abs(actual-forecast))]
Calculate the Mean Square Error (MSE) for the 3, 4, and 6 month values. MSE=average((actual-forecast)^2)
Forecast the upcoming periods sales using the moving average series with the lowest MAD
Why is it inadvisable to use the Moving Average approach to forecast much further into the future?
| Month | Sale | Month | Sale | Month | Sale |
| Oct-12 | 13.30 | Oct-13 | 24.01 | Oct-14 | 50.56 |
| Nov-12 | 1.70 | Nov-13 | 32.67 | Nov-14 | 60.06 |
| Dec-12 | 11.44 | Dec-13 | 23.19 | Dec-14 | 61.73 |
| Jan-13 | 15.52 | Jan-14 | 34.85 | Jan-15 | 54.14 |
| Feb-13 | 13.76 | Feb-14 | 33.22 | Feb-15 | 59.26 |
| Mar-13 | 19.71 | Mar-14 | 35.67 | Mar-15 | 41.49 |
| Apr-13 | 12.19 | Apr-14 | 33.45 | Apr-15 | 56.34 |
| May-13 | 12.21 | May-14 | 27.61 | May-15 | 53.42 |
| Jun-13 | 2.03 | Jun-14 | 22.90 | Jun-15 | 44.94 |
| Jul-13 | 15.02 | Jul-14 | 35.72 | Jul-15 | 57.71 |
| Aug-13 | 12.79 | Aug-14 | 28.65 | Aug-15 | 54.78 |
| Sep-13 | 13.48 | Sep-14 | 37.13 | Sep-15 | 68.25 |
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