Moving Average with different averaging periods: Year Actual Sales Forecast AP=1

Question

Moving Average with different averaging periods:

Year

Actual

Sales

Forecast

AP=1

ABS(Error)

Forecast

AP=2

ABS(Error)

Forecast

AP=4

ABS(Error)

1

565

2

590

3

583

4

597

5

615

597

18

590

25

583.75

31.25

6

611

615

4

606

5

596.25

14.75

7

610

611

1

613

3

601.5

8.5

8

623

610

13

610.5

12.5

608.25

14.75

Sum:

36

45.5

69.25

Which Moving Average model is most accurate based on MAD?

Year

Actual

Sales

Forecast

AP=1

ABS(Error)

Forecast

AP=2

ABS(Error)

Forecast

AP=4

ABS(Error)

1

565

2

590

3

583

4

597

5

615

597

18

590

25

583.75

31.25

6

611

615

4

606

5

596.25

14.75

7

610

611

1

613

3

601.5

8.5

8

623

610

13

610.5

12.5

608.25

14.75

Sum:

36

45.5

69.25

Explanation / Answer

Mean Absolute deviation (MAD) = sum of the absolute difference between actual and forecasted values / n

Mean Absolute deviation for Data set 1 (AP=1) = (18+4+1+13)/4 = 9

Mean Absolute deviation for Data set 2 (AP=2) = (25+5+3+12.5)/4 = 11.375

Mean Absolute deviation for Data set 3 (AP=4) = (31.25+14.75+8.5+14.75)/4 = 17.3125

Here, MAD is minimum in case of first moving average method of forecast (AP=1). Thus, its model is most accurate on the basis of mean absolute deviation.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.