Question

Month Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

Profit ($) 5,700 5,453 5,034 4,717 5,185 5,638 6,519 6,182 5,913

Step 2 of 5: What are the MAD, MSE and MAPE scores for the three-period moving average? Round any intermediate calculations, if necessary, to no less than six decimal places, and round your final answer to one decimal place.

Answer 1

a 3 month moving average forecast for month t is calculated as

where   is the Profit for month t

For example, the forecast for April 12 is calculated as

We get the rest as below

Month	Profit ($)	Moving average Forecast (Ft)
Jan-12	5,700
Feb-12	5,453
Mar-12	5,034
Apr-12	4,717	(5700+5453+5034)/3=5395.667
May-12	5,185	(5453+5034+4717)/3=5068
Jun-12	5,638	(5034+4717+5185)/3=4978.667
Jul-12	6,519	(4717+5185+5638)/3=5180
Aug-12	6,182	(5185+5638+6519)/3=5780.667
Sep-12	5,913	(5638+6519+6182)/3=6113

The three period moving average forecast is

Month	Profit ($)	Moving average Forecast (Ft)
Jan-12	5,700
Feb-12	5,453
Mar-12	5,034
Apr-12	4,717	5,395.666667
May-12	5,185	5,068.000000
Jun-12	5,638	4,978.666667
Jul-12	6,519	5,180.000000
Aug-12	6,182	5,780.666667
Sep-12	5,913	6,113.000000

Mean absolute deviation (MAD) is calculated as

Mean Squared Error (MSE) is calculated as

Mean Absolute Percentage Error (MAPE) is

ans:

	MAD	MSE	MAPE
three-period moving average	565.9	483831.2	9.8%