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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