i. Prepare a forecast for year 5 through 8 by using a three-year simple moving average. What is the forecast for year 9? ii. Calculate the Cumulative Frequency Error (CFE), Mean Absolute Deviation (MAD), Mean Squared Error (MSE), and Mean Absolute Percentage Error (MAPE) as at the end of year 8.

i. Prepare a forecast for year 5 through 8 by using a three-year simple moving average. What is the forecast for year 9? ii. Calculate the Cumulative Frequency Error (CFE), Mean Absolute Deviation (MAD), Mean Squared Error (MSE), and Mean Absolute Percentage Error (MAPE) as at the end of year 8.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.3: Simple Regression Models

Problem 2P: The file P13_02.xlsx contains five years of monthly data on sales (number of units sold) for a...

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Concept explainers

Forecasting in Business

Forecasting is the process of predicting the future based on the past and the present data and circumstances. In other words, forecasting is the act of making a detailed analysis of future events based on the decisions made in the past as well as the present. Forecasting plays a very important role in operational management as it helps in planning and decision-making. It is not only important for the success of a business but also contributes to individual growth and success. Many business organizations or companies have failed due to the shortcomings of their forecasting.

Question

4. The yearly demand for units manufactured by the Orion Company Limited has been as follows:
Year Units Year Units
1 520 5 860
2 830 6 940
3 520 7 990
4 750 8 850
Required:
i. Prepare a forecast for year 5 through 8 by using a three-year simple moving average.
What is the forecast for year 9?
ii. Calculate the Cumulative Frequency Error (CFE), Mean Absolute Deviation (MAD),
Mean Squared Error (MSE), and Mean Absolute Percentage Error (MAPE) as at the end
of year 8.

Leveraging special tenchniques in analyzing historical data to predict future trends. Forecasting covers the methods and types of forecasting and their application to case studies.

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