Question

Sales of Volkswagen's popular Beetle have grown steadily at auto dealerships in Nevada during the past 5 years (see table below). 

a) Forecasted sales for year 6 using a 3 year moving average is 558 sales (round your response to one decimal place). 

b) The MAD for a 3-year moving average based forecast is 67 sales (round your response to one decimal place). 

c) The MSE for a 3-year moving average based forecast is sales (round your response to the nearest whole number). 

Answer 1

a. forecast for year 5 using three year moving year average =  (520+570+584)/3 = 558

b. MAD for three year moving forecast is 67

Year	Sales	Forecasted sales	Deviation	Absolute deviation
1	460
2	495
3	520
4	570	491.6667	-78.3333	78.33333
5	584	528.3333	-55.6667	55.66667
			Sum	134
			Mean Absolute deviation	134/2 = 67

Year	Sales	Forecast sales	Error	Squared Error
1	460
2	495
3	520
4	570	491.6667	-78.33333333	6136.111
5	584	528.3333	-55.66666667	3098.778
			Total Squared Error	4617.444
			Mean Squared Error	2308.722

c. The MSE for three year moving average method is 2309