You want to compare how two forecasting methods would perform on some historical sales data. You will forecast the sales for months 4 through 19, calculate the mean absolute deviation (MAD) for both methods, and you can claim that the one that has lower MAD performed better, at least for the historical data.

a) The first method is known as the moving average method. The forecast for a month will be the average sales of three previous months. So, forecast for month 4 will be average sales of months 1 through 3. Forecast for month 5 will be average sales of months 2 through 4 and so on. So the forecast for month 19 will be the average sales of 16, 17 and 18. Use an appropriate Excel formula to calculate the moving average forecasts in column C.

b) In column D calculate the absolute deviation and mean absolute deviation for the moving average forecasts.

c) The second method is going to be linear regression. Write the slope and intercept values of the regression in cells F1 and F2.

d) Calculate regression forecasts for months 4 through 19 in column E.

e) In column F calculate the absolute deviation and mean absolute deviation for the linear regression forecasts.

f) What conclusion can you draw about the of the two forecasting methods? Please write your answer in the blue cell (i.e., D28).

Slope Intercept Month Sales Moving Average Absolute Deviation Regression Absolute Deviation 120 153 124 125 124 MAD: Partf)