Question

Homework Problem 3-20 An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend eq nalve approach. The linear trend equation is Fe 125+19t, and it was developed using data from periods 1 throug for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your intermediate calculetions and final answers to 2 decimal places.) ation and the h 10. Based on data tUnits Sold 148 12 145 148 145 152 150 13 14 15 16 17 154 156 160 18 19 167 MAD (Naive) HAD (Linear) MSE (Naive) MSE (Linear) Click to select] provides forecasts with less average error and less average squared error

Answer 1

Naive forecast

Period	Actuals	Forecast	Error	Abs error	(error)^2
11	148
12	145	148	-3	3	9
13	148	145	3	3	9
14	145	148	-3	3	9
15	150	145	5	5	25
16	152	150	2	2	4
17	154	152	2	2	4
18	156	154	2	2	4
19	160	156	4	4	16
20	167	160	7	7	49

MAD = AVg error = 3.44

MSE = Mean of square error = 14.33

Trend forecast

Period	Actuals	Forecast	Error	Abs error	(error)^2
11	148	145.9	2.1	2.1	4.41
12	145	147.8	-2.8	2.8	7.84
13	148	149.7	-1.7	1.7	2.89
14	145	151.6	-6.6	6.6	43.56
15	150	153.5	-3.5	3.5	12.25
16	152	155.4	-3.4	3.4	11.56
17	154	157.3	-3.3	3.3	10.89
18	156	159.2	-3.2	3.2	10.24
19	160	161.1	-1.1	1.1	1.21
20	167	163	4	4	16

MAD = 3.17

MSE = 12.08

Linear trend equation is a better method as it has lower value of MAD and MSE.