Problem
The table below shows the actual demand and forecast (using simple moving average (SMA) and exponential smoothing) for an item for a 6-month period (April through September). Your supervisor wants to test these two forecasting methods to see which method was better over this period.
|
Month
|
Demand
|
SMA
|
Exponential Smoothing
|
|
April
|
170
|
130
|
136
|
|
May
|
160
|
150
|
146.2
|
|
June
|
180
|
160
|
150.34
|
|
July
|
140
|
170
|
159.24
|
|
August
|
130
|
160
|
153.47
|
|
September
|
140
|
150
|
146.43
|
i. What is the mean absolute deviation (MAD) of SMA?
ii. What is the mean absolute deviation (MAD) of exponential smoothing?
iii. Which forecasting method is more accurate?