Harlen Industries has a simple forecasting model: Take the actual demand for the same month last year and divide that by the number of fractional weeks in that month. This gives the average weekly demand for that month. This weekly average is used as the weekly forecast for the same month this year. This technique was used to forecast eight weeks for this year, which are shown as follows, along with the actual demand that occurred.

The following eight weeks show the forecast (based on last year) and the demand that actually occurred:

Week Forecast Demand Actual Demand 1 140 137 2 140 133 3 140 150 4 140 160 5 140 180 6 150 170 7 150 185 8 150 205

a. Compute the MAD of forecast errors.

b. Using the RSFE, compute the tracking signal.

c. Based on your answers to parts

(a) and (b), comment on Harlen’s method of forecasting.

TW-111