Question

a. To select a reliable forecast technique that you can use to predict the future sales of your bags based on past sales performances, you have considered two different forecasting techniques - Nave forecast, and exponential smoothing forecast technique with a smoothing constant of 0.20. Now generate forecast results for all 5 months by using Nave forecast, and exponential smoothing forecast technique with a smoothing constant of 0.20.

b. Now use Mean absolute deviation (MAD) and Mean squared error (MSE), these forecast accuracy or error measurement tools, and determine which forecast technique between Nave forecast, and exponential forecast techniques gives the lowest forecast error and highest forecast accuracy.

4. Suppose your company has started selling handmade leather bags just a few months ago. The following table shows the actual sales of the bags for the first 5 months. Months Actual sales Nave forecast Exponential smoothing technique October (2021) 55 November (2021) 65 December (2021) 63 January (2022) 70 February (2022) 69