The following historical data have been collected representing sales of a produc

Question

The following historical data have been collected representing sales of a product. Compare forecasts using a three-period moving average, exponential smoothing with a-0.2, and linear regression. Using MAD and MSE, which forecasting model is best? Are your results the same using the two error measures? Demand (lab requirements) 29 39 38 38 43 40 Week 2 4 CRound your answers to 2 decimal places, the tolerance is +/-0.o1.) Forecasts using a three-period moving average: MAD criteria MSE criteria Forecasts using exponential smoothing with a 0.2: MAD criteria MSE criteria Forecasts using linear regression: MAD criteria MSE criteria model provides the best historical fit using the MAD criteria # 1 model provides the best historical fit using the MSE criteria. The The

Explanation / Answer

For 3 Month Average

MAD = 2.56

MSE = 9.67

For exponential SMoothing alpha = 0.2

MAD = 7.33

MSE = 58.25

Forecasts using Linear regression:

MAD = 2.17

MSE = 6.06

We find that linear model provides the most best historical fit usingthe MAD criteria.

We find that linear model provides the most best historical fit usingthe MSE criteria.

Week demand Forecast(3MA) ABS(y-y') (y-y')^2 1 29 2 39 3 38 4 38 35.33 2.67 7.111111 5 43 38.33 4.67 21.77778 6 40 39.67 0.33 0.111111 Sum 7.67 29.00 Average 2.56 9.67

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