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Question 1
Determine the error for each of the following forecasts. Compute MAD and MSE.
Period Value Forecast Error
1
2
3
4
5
6
7
8
9
10
11
Question 2
202— — 191 202
173 192
169 181
171 174 175 172 182 174 196 179 204 189 219 198 227 211
The U.S. Census Bureau publishes data on factory orders for all manufacturing,
durable goods, and nondurable goods industries. Shown here are factory orders in
the United States over a 13-year period ($ billion).
1. Usethesedatatodevelopforecastsfortheyears6through13usinga5-
yearmovingaverage.
2. Usethesedatatodevelopforecastsfortheyears6through13usinga5-yearweighted
moving average. Weight the most recent year by 6, the previous year by 4, the year
before that by 2, and the other years by 1.
3. Compute the errors of the forecasts in parts (a) and (b) and then the MAD.
Which forecast is better?
1. 1 2,512.7
2. 2 2,739.2
3. 3 2,874.9
4. 4 2,934.1