following are two weekly forecasts made by two different methods for the number
ID: 429856 • Letter: F
Question
following are two weekly forecasts made by two different methods for the number of gallons of gasoline, in thousands, demanded at a local gasoline station. Also shown are actual demand levels in thousands of gallons:
Forecasts
week Method 1 Method 2 Actual Demand
1 0.90 0.80 0.70
2 1.05 1.20 1.00
3 0.95 0.90 1.00
4 1.20 1.11 1.00
The MAD method 1 = ??? thousand gallons... 2. The absolute deviatin based on the forecast developed using Method 1 adds to ??? thousand gallons. Mean squared error (MSE) is the average of (actual-Forecast). from the information given in method 1 , the value of n=4. the value E(autal-forecast) will be??? thousand gallons.
Explanation / Answer
Method 1
Week
Method 1
Actual
E
E^2
1
0.9
0.7
0.2
0.04
2
1.05
1
0.05
0.0025
3
0.95
1
0.05
0.0025
4
1.2
1
0.2
0.04
0.5
0.085
MAD = sum of error/n
= 0.5/4
=0.125
MSE = sum of squared error/n
= 0.0.85/4
= 0.02125
Method 2
Week
Method 2
Actual
E
E^2
1
0.8
0.7
0.1
0.01
2
1.2
1
0.2
0.04
3
0.9
1
0.1
0.01
4
1.11
1
0.11
0.0121
0.51
0.0721
MAD = 0.51/4 = 0.1275
MSE = 0.0721/4 = 0.018
Method 1
Week
Method 1
Actual
E
E^2
1
0.9
0.7
0.2
0.04
2
1.05
1
0.05
0.0025
3
0.95
1
0.05
0.0025
4
1.2
1
0.2
0.04
0.5
0.085
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