A supply chain analyst for? UNG, Inc. was evaluating two methods for making a fo

Question

A supply chain analyst for? UNG, Inc. was evaluating two methods for making a forecast for the demand for widgets. She used a? 4-week moving average and compared that to using the exponential smoothing method.

She collected 40 weeks of historical demand data. Then she made sample forecasts for the most recent 10 weeks using each method.

For the? 4-week moving? average, the MAD was 220.1 units and MAPE was 15.6?%.

For the exponential smoothing? method, the MAD was 198.1 units and MAPE was 13.3%.

Which method do you recommend she? adopt? Why?

Explanation / Answer

I'd recommend the exponential smoothing method because lesser the MAD value, lesser is the variability or dispersion of the measurements. High MAPE shows that forecast was more than the actual.

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