Question

please answer part 2 of C

Storrs Cycles has just started selling the new Cyclone mountain bike, with monthly sales as shown in the table. Month Sales Jan 400 Feb 380 Mar 414 Apr 365 a) Based on the given monthly sales data, it can be said that there is not a strong linear trend in sales over time. b) First, co-owner Bob Day wants to forecast by exponential smoothing by initially setting February's forecast equal to January's sales with a = 0.10. Using the forecasting method, Bob's forecast for the month of May is (round your response to two decimal places): Month Forecast Feb Sales 400 380 414 365 Mar Apr May 400.00 398.00 399.60 396.14 Second, co-owner Sherry Snyder wants to forecast using a three-period moving average. The forecast for the month of May is (round your response to two decimal places). Forecast Month Jar Feb Mar Apr May Sales 400 380 414 365 398.00 386.33 c) Assume that May's actual sales figure turns out to be 400. For the forecast developed by Bob using exponential smoothing, the mean absolute deviation (MAD) = 18.62 sales (round your response to two decimal places). Assume that May's actual sales figure turns out to be 400. For the forecast developed by Sherry using a 3-month moving average, the mean absolute deviation (MAD) = sales (round your response to two decimal places).

Answer 1

To calculate the mean absolute deviation We have to first calculate the deviation and absolute deviation for all the periods. Where,

Deviation = Actual value - forecasted value

Absolute deviation = absolute value of deviation

So using the above formula the deviation and absolute deviation for all the periods are

• For April deviation = 365-398.00 = -33 and absolute deviation = 33
• For May deviation = 400-386.33 = 13.67 and absolute deviation = 13.67

Mean absolute deviation = Sum of the absolute deviation for all the periods/number of periods

= (33+13.67)/2

= 46.67/2

= 23.34