Two independent methods of forecasting based on judgment and experience have been prepared each month for...

Two independent methods of forecasting based on judgment and experience have been prepared each month for the past 10 months. The forecasts and actual sales are as follows:

Month	Sales	Forecast 1	Forecast 2
1	830	790	760
2	845	800	795
3	795	805	820
4	825	815	830
5	770	780	795
6	835	790	796
7	785	765	800
8	835	785	835
9	805	800	810
10	855	820	795

c. Prepare a naive forecast for periods 2 through 11 using the given sales data. Compute each of the following; (1) MSE, (2) MAD, (3) tracking signal at month 10, and (4) 2s control limits. (Round your answers to 2 decimal places.)


MSE
MAD
Tracking signal
Control limits	0 ±

Expert Solution

The naive forecast is very easy. The forecast for next month will be equal to actual sales of current month.for example naive forecast for month 2 is actual sales value of month 1.

MSE = Mean square Error

MAD = Mean Absolute Deviation

RFSE = Running Sum of Forecast Errors

TS = Tracking Signal

all these has been calculated for forecast 1 and forecast 2

- for control limits refer following table and calculation

Colby Messinger answered 2 years ago

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