Question

problem 2 only, no work necessary

2. Usage for a particular part at Acme Manufacturing over the last 5 weeks has been 21, 13, 19. 16, and 20 units, respectively. Assuming a stationary usage pattern, forecast the usage for week 6 using both the naïve method and the 3-week moving average. Based on the MAE (mean absolute error) criteria for forecast accuracy, which forecast would you choose for week 6.

Answer 1

Part A 3 WEEK MOVING AVERAGE METHOS Absolute Forecast Week Value Forecast forecast error error |a-b| a-b a 21 2 13 3 19 1.6667 4 16 17.6667 -1.6667 20 16.0000 4.0000 4.0000 18.3333 Total 2.3333 5.6667 Average 1.1667 2.8333 Mean absolute error =E]a-b|/n 2.83333 Forecast for the week 6 is 18.33

Part B NAIVER METHOD Absolute Forecast Week Value Forecast forecast error error a-b |a-b| a 21 13 21 -8 13 3 19 4 16 19 -3 3 20 16 4 Total -1 21 |Average -0.25 5.25 Mean absolute error =Ea-b|/n 5.25 Forecast for the week 6 is MAE for 3 week moving average is less than MAE for NAIVER method hence 3 week moving average woulfd choose