Critical Thinking Forecasting
Consider a case where demand follows a repeating pattern of medium-low-medium-high-medium-low-medium-high-etc, where the difference between low and med is 5 units, and the difference between med and high is 5 units.
If an exponential smoothing forecasting model was used with infiniti=1, then:
a) What would the Cumulative Forecast Error (CFE) be over a twenty-day interval? Explain in words more than showing the calculation, why is the result like this.
b) What would the Mean Absolute Deviation (MAD) be, over twenty-day interval? Explain it in words of why the result is as it is