Question

Problem 8-1 Consider the following time series data. Week Value 1 18 2 12 3 16 4 5 6 11 1914 Using the naïve method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy. (a) Mean absolute error If required, round your answer to one decimal place. (b) Mean squared error If required, round your answer to one decimal place. (c) Mean absolute percentage error If required, round your intermediate calculations and final answer to two decimal places.

Answer 1

SOLUTION:

From given data,

Problem 8-1

Consider the following time series data.

Week	1	2	3	4	5	6
Value	18	12	16	11	19	14

Using the naive method (most recent value) as the forecast for the next week,compute the following measures of forecast accuracy.

Week	Value	Fore cast	Fore cast error	Absolute error	square of Absolute error	%error	Absolute % error
1	18
2	12	18	-2	2	4	-2/12*100 = -16.66 %	16.66 %
3	16	13	3	3	9	3/16*100 =18.75 %	18.75 %
4	11	16	-5	5	25	-5/11*100 = -45.45 %	45.45 %
5	19	11	8	8	64	8/19*100 = 42.10 %	42.10 %
6	14	17	-3	3	9	-3/14*100 = -21.42 %	21.42 %
TOTAL				21	111		144.38 %

(a) Mean absolute error

Mean absolute error = Total absolute error / number of error

Mean absolute error = 21 / 5

Mean absolute error = 4.2

(b) Mean squared error

Mean squared error = Total square of Absolute error / number of error

Mean squared error = 111 / 5

Mean squared error = 22.2

(c) Mean absolute percentage error

Mean absolute percentage error = Total absolute percentage error / number of error

Mean absolute percentage error = 144.38 / 5

Mean absolute percentage error = 28.87 %

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