Question

Sales of? Volkswagen's popular Beetle have grown steadily at auto dealerships in Nevada during the past 5 years? (see table below).??????????????????????????????????????????????????

Year	Sales
1	455
2	502
3	516
4	555
5	590

?a) Forecasted sales for year 6 using the trend projection? (linear regression) method are 620.5 sales ?(round your response to one decimal? place).

b) What is the MAD?

The MAD for a linear regression forecast is ______ sales ?(round your response to one decimal? place).

c) What is the? MSE?

The MSE for the linear regression forecast is _______sales ?(round your response to one decimal? place).

Answer 1

Calculation of MAD
Year	Sales (x)	(y)	Deviation	Absolute Deviation
	absolute sales	forecasted sales	x-y	|x-y|
1	455	620.5	-165.5	165.5
2	502	620.5	-118.5	118.5
3	516	620.5	-104.5	104.5
4	555	620.5	-65.5	65.5
5	590	620.5	-30.5	30.5
				484.5	=total of absolute deviation'
		MAD = (Sum of |x-y|)/n = 484.5/5 = 96.9
Calculation of MSE
Year	Sales (x)	(y)	Deviation	Squared Error
	absolute sales	forecasted sales	x-y	(x-y)^2
1	455	620.5	-165.5	27390.25
2	502	620.5	-118.5	14042.25
3	516	620.5	-104.5	10920.25
4	555	620.5	-65.5	4290.25
5	590	620.5	-30.5	930.25
				57573.3	=total of squared error'
		MSE = (Sum of {x-y}^2)/n = 57573.3/5 = 11514.66
	With both MAD and MSE, the lower the score, the better