Question

Based on the information in the data set below, what is the mean squared error (accurate to 1 decimal)? Month Actual Forecast 1 12 11 2 13 10 3 10 8 4 11 6 5 9 8 a. 0.8 b. 1.00 c. 8.0

Answer 1

Answer: Mean squared error = 8.0

Explanation:

GIVEN the following ;

Actual and forecasted values for 5 months:

Actual : 12, 13, 10, 11, 9

Forecast: 11, 10, 8, 6, 8

To calculate mean squared error(MSE)

Number of observations = 5

Error =( Actual - forecat)

Error =(12 - 11) + (13 - 10) + (10 - 8) + (11 - 6) + (9 - 8)

Squared Error = 1^2 + 3^2 + 2^2 + 5^2+ 1^2 = 1 + 9 + 4 + 25 + 1

Squared error = 1 + 9+ 4 + 25 + 1 = 40

Mean squared error (MSE) = (Squared error ÷ number of observations)

Mean squared error = 40 ÷ 5

Mean squared error = 8.0