Individual Assignment (1)

Individual Assignment (1) - Tim O'Brien MGT 302-A...

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Tim O’Brien MGT 302-A Individual Assignment 2 3/17/11 Problem 2 (P.267) a. See attached chart b. See attached chart c. When trying to decide which of the two forecasts are better, we have to look at the cumulative sum of forecast errors (CFE) and the mean absolute deviation of forecast errors (MAD) of each chart. Displayed on the chart, we can see that the CFE for the simple moving average chart is 31.3, and the CFE for the weighted moving average is 20.3 (see calculations below). Because we want the CFE to be as close to zero as possible, the weighted moving average forecast method is better. Simple Moving Average CFE= 56.7+(-7.7)+(-21.0)+44.3+(-41.0)= 31.3 Weighted Moving Average CFE= 55.5+(-14.7)+(-22.2)+52.0+(-50.3)=20.3 When using the MAD as a measure for which forecast method is better, we conclude that the simple moving average is the better forecast method. Looking at the charts we can see that the MAD for the simple moving average methods is 34.1, and the MAD for the weighted average method is 38.9 (see calculations below).

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Individual Assignment (1) - Tim O'Brien MGT 302-A...

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