Question

Period	Demand	F1	F2
1	68	65	62
2	75	65	65
3	70	74	70
4	74	69	71
5	69	72	76
6	72	68	74
7	80	73	75
8	78	75	82

        

a.	Calculate the Mean Absolute Deviation for F1 and F2. Which is more accurate? (Round your answers to 2 decimal places.)

        

MAD F1
MAD F2

         

(Click to select)F1F2None appears to be more accurate.

        

b.	Calculate the Mean Squared Error for F1 and F2. Which is more accurate? (Round your answers to 2 decimal places.)

        

MSE F1
MSE F2

        

(Click to select)F2F1None appears to be more accurate.

         

c.	You can choose which forecast is more accurate, by calculating these two error methods. When would you use MAD? When would you us MSE? Hint: Control charts are related to MSE; tracking signals are related to MAD.

        

Either one might already be in use, familiar to users, and have past values for comparison. If (Click to select)control chartstracking signals are used, MSE would be natural; if (Click to select)tracking signalscontrol charts are used, MAD would be more natura

        

d.	Calculate the Mean Absolute Percent Error for F1 and F2. Which is more accurate? (Round your intermediate calculations to 2 decimal places and and final answers to 2 decimal places.)

         

MAPE F1
MAPE F2

       

(Click to select)F1F2None appears to be more accurate.

Answer 1

FORECAST 1

PERIOD	DEMAND	F1	DEVIATION	ABS DEV	ABS DEV / DEMAND * 100	DEV^2
1	68	65	68 - 65 = 3	ABS(3) = 3	(3 / 68) / 100 = 4.41	3^2 = 9
2	75	65	75 - 65 = 10	ABS(10) = 10	(10 / 75) / 100 = 13.33	10^2 = 100
3	70	74	70 - 74 = -4	ABS(-4) = 4	(4 / 70) / 100 = 5.71	-4^2 = 16
4	74	69	74 - 69 = 5	ABS(5) = 5	(5 / 74) / 100 = 6.76	5^2 = 25
5	69	72	69 - 72 = -3	ABS(-3) = 3	(3 / 69) / 100 = 4.35	-3^2 = 9
6	72	68	72 - 68 = 4	ABS(4) = 4	(4 / 72) / 100 = 5.56	4^2 = 16
7	80	73	80 - 73 = 7	ABS(7) = 7	(7 / 80) / 100 = 8.75	7^2 = 49
8	78	75	78 - 75 = 3	ABS(3) = 3	(3 / 78) / 100 = 3.85	3^2 = 9
SIGMA			25	39	52.72	233

MAD = SUM(ABS ERROR) / N, N = 8

MAD = 39 / 8 = 4.88

MSE = SUM((DEMAND - FORECAST)^2) / N, N = 8

MSE = 233 / 8 = 29.13

MAPE = SUM((ABSOLUTE DEVIATION / ACTUAL DEMAND) * 100) / N, N = 8

MAPE = 233 / 8 = 6.59

FORECAST 2

PERIOD	DEMAND	F2	DEVIATION	ABS DEV	ABS DEV / DEMAND * 100	DEV^2
1	68	62	68 - 62 = 6	ABS(6) = 6	(8.82 / 68) * 100 = 8.82	6^2 = 36
2	75	65	75 - 65 = 10	ABS(10) = 10	(13.33 / 75) * 100 = 13.33	10^2 = 100
3	70	70	70 - 70 = 0	ABS(0) = 0	(0 / 70) * 100 = 0	0^2 = 0
4	74	71	74 - 71 = 3	ABS(3) = 3	(4.05 / 74) * 100 = 4.05	3^2 = 9
5	69	76	69 - 76 = -7	ABS(-7) = 7	(10.14 / 69) * 100 = 10.14	-7^2 = 49
6	72	74	72 - 74 = -2	ABS(-2) = 2	(2.78 / 72) * 100 = 2.78	-2^2 = 4
7	80	75	80 - 75 = 5	ABS(5) = 5	(6.25 / 80) * 100 = 6.25	5^2 = 25
8	78	82	78 - 82 = -4	ABS(-4) = 4	(5.13 / 78) * 100 = 5.13	-4^2 = 16
SIGMA				37	50.5	239

MAD = SUM(ABS ERROR) / N, N = 8

MAD = 50.5 / 8 = 4.63

MSE = SUM((DEMAND - FORECAST)^2) / N, N = 8

MSE = 239 / 7 = 29.88

MAPE = SUM((ABSOLUTE DEVIATION / ACTUAL DEMAND) * 100) / N, N = 8

MAPE = 50.5 / 8 = 6.31

3.

	MAD	MSE	MAPE
FORECAST 1	4.88	29.13	6.59
FORECAST 2	4.63	29.88	6.31
BETTER OPTION	FORECAST 2	FORECAST 1	FORECAST 2

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