Respuesta :
Answer:
From both criterion, MAD and MSE, technique 1 is more accurate forecast than technique 2 forecast.
Explanation:
First of all let's sort out this data:
Month . Demand . Technique 1 Forecast . Technique 2 Forecast
1 492 488 495
2 470 484 482
3 485 480 478
4 493 490 488
5 498 497 492
6 492 493 493
Now, first part is to check the accuracy of the forecast using MAD.
Where,
MAD = Mean Absolute Deviation.
Formula = (Sum of all absolute differences between demand and forecast)/ Time period
And the rule is, we will compare final MAD values of both the techniques and compare. The lower value will be considered as accurate forecast technique.
So, for Technique 1, we have:
Month . Demand(D). Technique 1 Forecast(F) |D-F|
1 492 488 4
2 470 484 -14
3 485 480 5
4 493 490 3
5 498 497 1
6 492 493 -1
(neglecting negative sign because of absolute) Total = 28
MAD = Total SUM / Time period
Time Period = 6
MAD = 28/6
MAD = 4.66
Now, let's do it for Technique 2:
Month . Demand . Technique 2 Forecast . |D-F|
1 492 495 -3
2 470 482 -12
3 485 478 7
4 493 488 5
5 498 492 6
6 492 493 -1
(neglecting negative sign because of absolute) Total = 34
MAD = Total SUM / Time period
Time Period = 6
MAD = 34/6
MAD = 5.66
Hence, Technique 1 is accurate forecast using MAD because it has lower MAD value.
Now, the second part of the question is to solve this by using MSE.
And the rule is, we will compare final MSE values of both the techniques and compare. The lower value will be considered as accurate forecast technique.
MSE = Mean Squared Error
Formula = (Sum of all squared differences between demand and forecast) /Time period
Let's do it for Technique 1:
Month . Demand(D). Technique 1 Forecast(F) (D-F) . (D-F)²
1 492 488 4 16
2 470 484 -14 . 196
3 485 480 5 . 25
4 493 490 3 9
5 498 497 1 1
6 492 493 -1 1
(Add all (D-F)² values for the total) Total = 248
MSE = Sum Total/ Time period
MSE = 248/6
MSE = 41.33
Similarly for Technique 2:
Month . Demand(D). Technique 2 Forecast(F) (D-F) . (D-F)²
1 492 495 -3 9
2 470 482 -12 . 144
3 485 478 7 . 49
4 493 488 5 25
5 498 492 6 36
6 492 493 -1 1
(Add all (D-F)² values for the total) Total = 264
MSE = Sum Total/ Time period
MSE = 264/6
MSE = 44
According to MSE as well, technique 1 forecast is accurate because it also has lower value than technique 2.
