Question

Problem 3: Forecasting (8 points) The company you work for has been working with two different consulting companies who each provided their own demand forecast for the new product launched earlier this year. The product has been on the market for 4 weeks and below are the actual units sold compared with each consulting company's forecast. Week Actual Sales (units) Inland Consulting Forecast (units) 9,256 9,981 11,639 15,548 Seacoast Consulting Forecast (units) 8,000 10,000 12,000 14,000 9,500 11,000 13,500 15,000 a) Calculate the MAPE for the Seacoast Consulting forecast. (3 points) b) Calculate the MAPE for the Inland Consulting forecast. (3 points) c) Using the MAPE values from parts a and b, which consulting company had the better forecast? (2 points)

Answer 1

(a):

Week	Actual	Forecast	Absolute % error
1	9,256.00	8,000.00	15.70%
2	9,981.00	10,000.00	0.19%
3	11,639.00	12,000.00	3.10%
4	15,548.00	14,000.00	11.06%
		Total	30.05%
		Total/n (n = 4)	7.51%

Thus MAPE = 7.51%

(b):

Week	Actual	Forecast	Absolute % error
1	9,256.00	9,500.00	2.64%
2	9,981.00	11,000.00	10.21%
3	11,639.00	13,500.00	15.99%
4	15,548.00	15,000.00	3.65%
		Total	32.49%
		Total/n (n = 4)	8.12%

Thus MAPE = 8.12%

(c ): Seacoast Consulting has a better forecast as its MAPE is lower.