Question

Question 1 Part A

The following table shows the best forecast for a time series representing the number of people (in thousands) who have two or more jobs in the United States

Date	Jobs	Forecast
May 2013	6,487	6,788
June 2013	6,284	6,523
July 2013	6,253	6,279
August 2013	6,840	6,336

Calculate the MAD (mean absolute deviation) forecasting accuracy measurement. Take all calculations to three decimal places.

Part B

Based on the actual and forecasted returns shown below, calculate the mean absolute deviation (MAD)

Month	Monthly Return	Forecast (%)
July	2.20	1.95
August	2.25	2.21
September	1.8	2.35
October	1.4	2.15
November	1.1	1.6
December	1.9	1.2

		0.249
		1.531
		0.507
		None of these.
		2.344

Part C

To calculate an exponential smoothing forecast of demand, what values are required?

		alpha, last forecast, last actual value
		alpha, last forecast, number of periods
		last forecast, number of periods, averaging period
		alpha, last forecast
		alpha, number of periods, last actual demand

Answer 1

Part a:

Mean absolute deviation =

Part b:

Mean absolute deviation =

The answer is none of the above

Part c:

Alpha, last forecast and last actual value

The formula for exponential smoothing forecast is

Yt+1 = Yt + alpha (At-Yt)

where, Yt is the forecasted value of the previous period, alpha is the correction term and At is the actual value of the previous period.