Problem 3-20 An analyst must decide between two different forecasting techniques
ID: 3240959 • Letter: P
Question
Problem 3-20
An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is Ft = 125 + 2.2t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculations and final answers to 2 decimal places.)
An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is Ft = 125 + 2.2t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculations and final answers to 2 decimal places.)
Explanation / Answer
from above
MAD (Naive) =4.11
MSE(Naive)=19.22
MAD(Linear)=6.70
MSE(Linear)=52.22
from above MAD and MSE for Naive and Linear Forecast; Naive method has better accuracy due to lower MAD and MSE
t Units Sold(A) naïve forecast(Fn) |A-F| (A-F)^2 11 144 12 148 144 4 16 13 151 148 3 9 14 147 151 4 16 15 154 147 7 49 16 149 154 5 25 17 154 149 5 25 18 156 154 2 4 19 158 156 2 4 20 163 158 5 25 total 37 173 mean 4.11 19.22Related Questions
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