The table below shows the results of two methods (Forecast 1 and Forecast 2) of forecasting for frozen prepared dinners, as well as the demand for the eight periods. PREDICTED DEMAND Period Demand F1 F2 1 68 67 65 2 75 67 66 3 70 73 70 4 74 69 69 5 69 72 72 6 72 66 73 7 80 70 75 8 78 77 81
a. Compare the accuracy of Forecast 1 and Forecast 2 by calculating the Mean Absolute Deviation for each one. Which is more accurate? (Round your answers to 2 decimal places.) MAD F1 MAD F2 appears to be more accurate.
b. Compare the accuracy of Forecast 1 and Forecast 2 by calculating the Mean Squared Error for each one. Which is more accurate? (Round your answers to 2 decimal places.) MSE A MSE B appears to be more accurate.
c. Managers can use either of these error methods to compare forecasts. In what situation would someone use MAD? MSE? (Hint: MSE goes with control charts; MAD goes with tracking signals). Either one might already be in use, familiar to users, and have past values for comparison. If are used, MSE would be natural; if are used, MAD would be more natural.
d. Compare the accuracy of Forecast 1 and Forecast 2 by calculating the Mean Absolute Percent Error for each one. Which is more accurate? (Round your intermediate calculations to 2 decimal places and and final answers to 2 decimal places.) MAPE F1 MAPE F2 appears to be more accurate.