I am trying to figure out where the Period 6 and 7 values came from. The answer

Question

I am trying to figure out where the Period 6 and 7 values came from. The answer for the MSE was recorded as 28, 475.62, I'm just not sure where that came from either.

Forecasting Moving averages - 2 period moving average Num pds 2 Forecasting 700,000 Forecasts and Error Analysis Forecast Error Absolute Squared Abs Pct Err 680,000 Data Period Period 1 Period 2 Period 3 Period 4 Period 5 Demand 582,569 631,817 629,078 652,780 679,072 Value 607,193 21.885.00 21.885.00 478,953,225.00 03 4894 630,448 22,332.50 22,332.50 498,740,556.25 03.4294 640,929 | 38,143.00 38,143.00 1,454,888,449.00 05 6294 665,926 679,072 Total 82,360.50 82360.5 24325822301 12.52% Average 27453.5 27453. 5 8 10860743. 4 04.17% before forecast Bias MAD MSE MAPE 28.475.62 672,499 -6573 6 5731 4320432900 99% Average after forecast period 6 Bias MAD MSE MAPE 660,000 640,000 620,000 600,000 580,000 560,000 540,000 520,000 Period 6 Period 7 665,926 679,072 + 1 2 3 5 6 7 2 Period Moving Average MSE 28,475.62 MAD 27,453.50 MAPE 04.17961 4 Time Demand Forecast

Explanation / Answer

The demand for periods 1 to 5 is given in the question. The forecast method that is adopted to predict the demands for the given periods is the two-period moving average forecast.

For example, the forecast for period 3 is the average value of the demand for period 1 and 2,i.e.

= (582569 + 631817) / 2

= 607193

Similarly, the forecast for period 4 is the average value of the demand for period 2 and 3 and so on.

Now, the forecast for the period 6 is the average value of the demand for period 4 and 5,i.e.

= (652780 + 679072) / 2

= 665926

The forecast for period 7 is taken to be equal to that of period 5 as the actual demand for period 6 is unknown.

MSE or the Mean squared error is the average value of the squares of the error or deviation between the actual demands and the forecasts. The common periods for which we have data about the actual demands and the forecasts are used in the calculations for MSE,i.e. periods 3,4 and 5. The actual value of the MSE is equal to 810860743.4 as has been shown in the table itself.

In the answer, they have taken the square root of this value which comes out to be equal to 28475.62 which is incorrect as the MSE is simply the average value of the squares of the errors. No square root is required by definition.

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