# FORECASTING- Worked answers for 1-6 - A manager has been...

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A manager has been using a certain technique to forecast demand for a certain word processing software package. Actual demand and his corresponding predictions are shown below: Month Actual Demand Manager’s Forecast January 40 40 February 45 40 March 60 50 April 44 50 May 46 40 1. What was his forecast error in February? a) 0 b) -5 c) 5 d) -6 e) 6 explanation: Forecast error = Actual demand – forecast. Therfore, forecast error in February = 45(actual demand) – 40(forecast) = 5 2. What is the mean error (ME) for these five months of forecasting? a) 0 b) -3 c) 3 d) 5.4 e) 39.4 explanation: error for each month = Actual demand for the month – manager’s forecast for the month. Therefore, January February March April May Forecast error for each month 40-40=0 45-40=5 60-50=10 44-50=-6 46-40=6 Mean error(ME) = (sum of these five errors)/5 = (0+5+10+(-6)+6)/5 = 15/5 = 3

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3. What is the mean absolute deviation (MAD) for these five months of forecasting? a) 0 b) -3 c) 3 d) 5.4 e) 39.4 explanation: MAD = Σ│Actual(t) – Forecast(t)│/ n = (│0│+│5│+│10│+│-6│+│6│) / 5 = (0+5+10+6+6)/5 = 27/5 = 5.4
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## This note was uploaded on 08/30/2011 for the course MGO 302 taught by Professor Hancock during the Fall '08 term at SUNY Buffalo.

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FORECASTING- Worked answers for 1-6 - A manager has been...

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