Month Actual Sales Jan-20 34 32 Apr-20 May-20 28 35 Jun-20 35 Jul-20 25 Aug-20 34 Sep-20 33 Oct-20 22 29 Feb-20 35 Mar-20 Nov-20 33 Dec-20 30 Jan-21 27 28 Feb-21 30 Mar-21 32 Forecasted Sales The goal of forecasting is to choose a forecasting technique that causes the least amount of deviation between the forecast and the actual value Choosing a forecasting technique 1. You will be using January through December 2020 data to make your forecasts. The January, February, and March 2021 data is your "hold out" data that will be used to choose the forecasting method that fits your data the best. 2. Plot the Jan-Dec 2020 data to look for trends (increasing, decreasing, seasonality) 3. Make a forecast for January, February, and March 21 using the following forecasting methods Nave forecast (1 month moving average) 2 month moving average 3 month moving average Exponential Smoothing Alpha=0.2 Exponential Smoothing Alpha=0.4 Exponential Smoothing Alpha = 0.6 Linear regression 4. Use the forecasts and the holdout data to evaluate the Mean Absolute Deviation for each forecasting method for Jan, Feb, and Mar 2021 5. Choose the forecasting method that best fits your data. Month Actual Sales Forecasted Sales Forecasts 1 Moving Ave 2 Moving Ave 3 Moving Ave .2 Exp Smooth .4 Exp Smooth .6 Exp Smooth Linear Regression MAD 1 Moving Ave 2 Moving Ave 3 Moving Ave .2 Exp Smooth .4 Exp Smooth .6 Exp Smooth Linear Regression Jan-20 Feb-20 Mar-20 34 35 32 Chosen Forecasting Method Instructions Apr-20 May-20 Jun-20 28 35 35 Jul-20 22 25 Aug-20 34 Sep-20 33 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 29 33 30 27 30 Mar-21 32 28 Jan-21 Feb-21 Mar-21 Jan-21 Feb-21 Mar-21 Average Use the yellow data to make your forecasts (green cells) Use the hold out data (pink cells) to determine monthly absolute deviation (orange cells) Use the monthly absolute deviations (orange cells) to calculate the MAD for each forecasting technique. Place the average of the three months of absolute deviations (MAD) in the blue cells. Identify the best forecasting technique for this data and write that technique in the purple cell.