Question
An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. Linear trend:
An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach.
Linear trend: The linear trend equation is Ft = 126 + 2.1t. This equation was developed from data in periods 1 through 10. Use this equation to forecast periods 11 through 20. Then, based on actual data for periods 11 through 20 in the table below, calculate MAD and MSE for those periods.
Naive: Using periods 11 through 20, develop a naive forecast. Then caculate MAD and MSE for naive.
Enter your final answers in the second table below. (Round intermediate calculations and final answers to 2 decimal places.)
t | Units Sold |
11 | 146 |
12 | 146 |
13 | 148 |
14 | 144 |
15 | 153 |
16 | 149 |
17 | 154 |
18 | 157 |
19 | 162 |
20 | 166 |
MAD (Naive) | |
MAD (Linear) | |
MSE (Naive) | |
MSE (Linear) | |
Which of these two methods has the greater accuracy if MAD and MSE are used?
(Click to select) Linear trend Naive method provides forecasts with less average error and less average squared error.
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