An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is F+=123 +1.9t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculations and final answers to 2 decimal places.) 11234567890 ल t Units Sold 11 146 12 147 150 145 20 157 149 155 158 160 167 MAD (Naive) MAD (Linear) MSE (Naive) MSE (Linear) Linear trend 5.22 2.81 provides forecasts with less average error and less average squared error.

An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is F+=123 +1.9t, and it was developed using data from periods 1 through 10. Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculations and final answers to 2 decimal places.) 11234567890 ल t Units Sold 11 146 12 147 150 145 20 157 149 155 158 160 167 MAD (Naive) MAD (Linear) MSE (Naive) MSE (Linear) Linear trend 5.22 2.81 provides forecasts with less average error and less average squared error.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter13: Regression And Forecasting Models

Section13.6: Moving Averages Models

Problem 22P: The file P13_22.xlsx contains total monthly U.S. retail sales data. While holding out the final six...

See similar textbooks

Similar questions

Under what conditions might a firm use multiple forecasting methods?
The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels. Management is trying to decide whether direct labor hours (DLH) or units produced is the better measure of activity for the firm. Monthly data for the preceding 24 months appear in the file P13_40.xlsx. Use regression analysis to determine which measure, DLH or Units (or both), should be used for the budget. How would the regression equation be used to obtain the budget for the firms overhead costs?
The file P13_42.xlsx contains monthly data on consumer revolving credit (in millions of dollars) through credit unions. a. Use these data to forecast consumer revolving credit through credit unions for the next 12 months. Do it in two ways. First, fit an exponential trend to the series. Second, use Holts method with optimized smoothing constants. b. Which of these two methods appears to provide the best forecasts? Answer by comparing their MAPE values.
The owner of a restaurant in Bloomington, Indiana, has recorded sales data for the past 19 years. He has also recorded data on potentially relevant variables. The data are listed in the file P13_17.xlsx. a. Estimate a simple regression equation involving annual sales (the dependent variable) and the size of the population residing within 10 miles of the restaurant (the explanatory variable). Interpret R-square for this regression. b. Add another explanatory variableannual advertising expendituresto the regression equation in part a. Estimate and interpret this expanded equation. How does the R-square value for this multiple regression equation compare to that of the simple regression equation estimated in part a? Explain any difference between the two R-square values. How can you use the adjusted R-squares for a comparison of the two equations? c. Add one more explanatory variable to the multiple regression equation estimated in part b. In particular, estimate and interpret the coefficients of a multiple regression equation that includes the previous years advertising expenditure. How does the inclusion of this third explanatory variable affect the R-square, compared to the corresponding values for the equation of part b? Explain any changes in this value. What does the adjusted R-square for the new equation tell you?
The file P13_26.xlsx contains the monthly number of airline tickets sold by the CareFree Travel Agency. a. Create a time series chart of the data. Based on what you see, which of the exponential smoothing models do you think will provide the best forecasting model? Why? b. Use simple exponential smoothing to forecast these data, using a smoothing constant of 0.1. c. Repeat part b, but search for the smoothing constant that makes RMSE as small as possible. Does it make much of an improvement over the model in part b?
The file P13_22.xlsx contains total monthly U.S. retail sales data. While holding out the final six months of observations for validation purposes, use the method of moving averages with a carefully chosen span to forecast U.S. retail sales in the next year. Comment on the performance of your model. What makes this time series more challenging to forecast?
The file P13_28.xlsx contains monthly retail sales of U.S. liquor stores. a. Is seasonality present in these data? If so, characterize the seasonality pattern. b. Use Winters method to forecast this series with smoothing constants = = 0.1 and = 0.3. Does the forecast series seem to track the seasonal pattern well? What are your forecasts for the next 12 months?
An analyst must decide between two different forecasting techniques for weekly sales of rollerblades: a linear trend equation and the naive approach. The linear trend equation is Ft= 124 + 2t,and it was developed using data from periods 1 through 10. Based on data for periods 11 through20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSEare used?t Units Sold11 14712 14813 15114 14515 15516 15217 15518 15719 16020 165
The past two years sales at ACSR Inc. were 3 million and 5 million. Their forecast team used a two-period moving average to forecast its sales this year. But the actual sales for this year were 5 million. Now, the forecast team wants to forecast its sales for next year by using exponential smoothing with alpha equals 0.6. What is the forecast using exponential smoothing with alpha = .6? 2. If we decide to use an alpha of .2 instead of .6, will we be ‘weighting the error from the previous period higher or the Forecast from the previous period higher? Explain briefly or show using math! (In this question I am asking if we change the alpha to a lower alpha, what will be the effect – what will we be ‘weighing’ as more important?)
The number of fishing rods selling each day is given below. Perform analyses of the time series to determine which model should be used for forecasting. 3 day moving average analysis 4 day moving average analysis 3 day weighted moving average analysis with weights W1=0.2, W2=0.3 and W3=0.5 with W1 on the oldest data. Exponential smoothing analysis with A=0.3 Which model provides a better fit of the data? Forecast day 13 sales of fishing rods using the model chosen in part (e) Day Rods Sold 1 60 2 70 3 110 4 80 5 70 6 85 7 115 8 105 9 65 10 75 11 95 12 85 Please read the relevant article, found in the VLE, before answering the question. Discuss the process and findings of the study of the article. Suggest a possible study that could be done at your current or past job that could use a similar methodology and analysis.
Complete the forecasting worksheets for: Naïve Average Moving Average Weighted Moving Average using the weights of .8, .15, and .05 with .8 being the most current, then .15, then .05 ExponA using and alpha level of .75 ExponB will automatically be .25 when A is .75 Exponential Solver What is the best alpha level as determined by the Exponential Solver? Which is the best forecasting option for MAE? What is the MAE? Which is the best forecasting option for MAPE? What is the MAPE? Period Sales 1 115 2 118 3 128 4 122 5 135 6 128 7 135 8 132 9 132 10 135
It has been said that forecasting using exponential smoothing is like driving a car by looking in therear-view mirror. What are the conditions that would have to exist for driving a car that are analogous to the assumptions made when using exponential smoothing?2. What capability would an organization have to have to not need forecasts?3. When a new business is started, or a patent idea needs funding, venture capitalists or investmentbankers will want to see a business plan that includes forecast information related to a profit andloss statement. What type of forecasting information do you suppose would be required?4. Discuss how you would manage a poor forecast.5. Omar has heard from some of his customers that they will probably cut back on order sizes in thenext quarter. The company he works for has been reducing its sales force due to falling demand andhe worries that he could be next if his sales begin to fall off. Believing that he may be able to convince his customers not to cut…