Exercises Methods 1. Consider the following time series data. test Week1 2 3 4 5

Question

Exercises Methods 1. Consider the following time series data. test Week1 2 3 4 5 6 Value 18 13 16 11 17 14 Using the naive method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy a. Mean absolute error b. Mean squared error. c. Mean absolute percentage error. d. What is the forecast for week 7? Refer to the time series data in exercise 1. Using the average of all the historical data as a forecast for the next period, compute the following measures of forecast accuracy a. Mean absolute error. b. Mean squared error. c. Mean absolute percentage error. d. What is the forecast for week 7? 2. test

Explanation / Answer

Solution:

1.

a) Mean absolute error = 22 / 5 = 4.4

b) Mean squared error = 104 / 5 = 20.8

c)Mean absolute percentage erro = 159.39 / 5 = 31.878

d) forecast for week 7 is 14 (most recent value)

2.

Forecast for week 2 is 18

Fore cast for week 3 is (18 + 13 ) /2 = 15.50

Fore cast for week 4 is (18 + 13 + 16) / 3 = 15.666 = 15.67 (similarly the rest of the forecast is found)

a) Mean absolute error = 13.67 / 5 = 2.734

b) Mean squared error = 54.28 / 5 = 10.856

c) mean absolute percentage erroe = 105.86 / 5 = 21.172

d). Forecast for week 7 (average all historical data) = (18 + 13 + 16 + 11 + 17 + 14) / 6

= 14.833

Week time Forecast error absolute error squared error % error absolute % error 1 18 2 13 18 -5 5 25 -38.46 38.46 3 16 13 3 3 9 18.75 18.75 4 11 16 -5 5 25 -45.45 45.45 5 17 11 6 6 36 35.29 35.29 6 14 17 -3 3 9 -21.43 21.43 total 22 104 -51.30 159.39

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