Two different forecasting techniques were used to forecast demand for cases of bottled water in a store. Actual demand and the two sets of forecasts for seven periods are as follows:

a. Calculate the MAD for each set of forecasts. Which technique appears to be more accurate?
b. Calculate the MSE for each set of forecasts. Which technique appears to be more accurate?
c. Calculate the MAPE for each set of forecasts. Which technique appears to be more accurate?
d. Do all three measures of forecast errors provide tire same conclusion (i.e., are they consistent) in this case? Do you expect consistent results for every case? Explain.
e. In practice, either MAD, MSE, or MAPE would be employed to compute a measure of forecast errors. What factors might lead a manager to favour one?

Transcribed Image Text:

Period 1 2 3 4 567 Domand 74 68 75 70 7 60 72 80 6 8 72 172 70 77 Forecast Demand F1 F2 69 66 68 71 66 68 70 72 74 76 78