Problem 3-21 (Algo)

Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of bottled water. Actual demand and the two sets of forecasts are as follows:

		PREDICTED DEMAND
Period	Demand	F1	F2
1	68	60	63
2	75	71	60
3	70	75	70
4	74	69	73
5	69	71	77
6	72	66	77
7	80	72	77
8	78	73	85

Click here for the Excel Data File

a. Compute MAD for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal places.)

b. Compute the MSE for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal places.)

c. In practice, either MAD or MSE would be employed to compute forecast errors. What factors might lead a manager to choose one rather than the other?

d. Compute MAPE for each data set. Which forecast appears to be more accurate? (Round your intermediate calculations to 2 decimal places and and final answers to 2 decimal places.)