FORECASTING
OLD EXAM QUESTIONS
(The answer key is at the end of this document.)
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
Answer the following four questions, based on this information.
1.
What was his forecast error in February?
a)
0
b) -5
c) 5
d) -6
e) 6
2.
What is the mean error (ME) for these five months of forecasting?
3.
What is the mean absolute deviation (MAD) for these five months of forecasting?
4.
If
the manager had used a simple two month moving average to forecast this demand, which
of the following statements are true?
I.
The two month moving average forecast would have been
more
accurate in the month
of April than the original manager’s forecast provided in the table above.
II.
The two month moving average forecast for May would have been 52.
III.
The two month moving average forecast for May would have been higher than actual
May demand, whereas the original manager’s forecast provided above was lower than
actual May demand.

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