Problem 15-03 (Algorithmic)

Consider the following time series data.

Week	1	2	3	4	5	6
Value	19	12	15	11	19	15

Using the nave method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy:

1. Mean absolute error (MAE)
2. Mean squared error (MSE)
3. Mean absolute percentage error (MAPE)

a. Round your answers to two decimal places.

MAE =

MSE =

MAPE =

b. Using the average of all the historical data as a forecast for the next period, compute the same three values. Round your answers to two decimal places.

MAE =

MSE =

MAPE =

Which method appears to provide the more accurate forecasts for the historical data?

Naive method (most recent value) Average of all the historical data