Question

The department manager using a combination of methods has forecast sales of toasters at a local department store. Calculate the MAD, MSE, and MAPE measure of forecast accuracy for the manager's forecast and the naïve forecast. Compare the manager's forecast against a naive forecast covering the same time period. Which forecast method is better given the various measures of forecast?


Month Unit Sales Manager's Forecast Abs. Error Naïve Abs Error
January 52
February 61
March 62
April 55
May 66
June 51
July 57 58
August 58 59
September 61 59
October 62 59
November 63 60
December 63 60

Answer 1

Answer:

MAD = (1/n)*?ABS(S-F) where n= number of periods; S = Sales; F = Forecast

MSE = (1/n)*?(S-F)2

MAPE = (1/n)*?ABS(S-F)/S

Naive forecast is better compared to Manager's forecast as MAD and MAPE are lower though MSE is on the higher side.

Calculation table is attached in picture.

Explanation:

See the attached table for explanation.