Instructions

Two different forecasting techniques (F1 and F2) were used to forecast demand for cases of bottled water. Actual demand and the two sets of forecasts are as follows: Period 1 2 3 4 Demand 68 75 79 74 69 72 PREDICTED DEMAND F1 F2 60 63 71 60 75 70 69 73 71 77 66 77 72 77 73 85 5 6 7 8 78 a. Compute MAD for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal place.) MAD F1 MAD F2 F1 appears to be more accurate. b. Compute the MSE for each set of forecasts. Given your results, which forecast appears to be more accurate? (Round your answers to 2 decimal places.) MSE F1 MSE F2 F1 appears to be more accurate. c. In practice, elther MAD or MSE would be employed to compute forecast errors. What factors might lead a manager to choose one rather than the other? Either one might already be in use, familiar to users, and have past values for comparison. If control charts | are used, MSE would be natural; if tracking signal are used, MAD would be more natural. d. Compute MAPE for each data set. Which forecast appears to be more accurate? (Round your Intermediate calculations to 2 decimal places and and final answers to 2 decimal places.) MAPE F1 MAPE F2 F1 appears to be more accurate.

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