Question

. Registration numbers for an accounting seminar over the past 10 weeks are shown below:

Week	1	2	3	4	5	6	7	8	9
Registrations	22	21	25	25	27	33	35	32	35

a) Forecast registrations for weeks 6-9 using a four- week moving average and a four-week weighted moving average with weights of .5,.3,.1, and .1.

b) Determine which forecasts are more accurate using the concept of MAD?

c) Explain the meaning of your answer in part(b).

Answer 1

Answer a is in image provided

Explanation:

Absolute deviation= |Forecast - Sales|

MAD= mean absolute deviation= sum of absolute deviation/no. of periods

Forecast 4 period moving average= (sum of actual demand of last 4 periods/4)

Forecast weighted average= (actual demand of most recent period*0.5+ actual demand of 2^nd most recent period*0.3+ actual demand of 3^rd most recent period*0.1+ actual demand of 4^th most recent period*0.1)

Answer b: after using MAD we cn easily say that weighted forecast is better than moving average forecast. MAD for weighted forecast is 1.85 and MAD for moving average is 5.31.

Answer c: MAD represents mean of the forecast deviations from actual registrations. if the deviations of forecast is less than its mean will be less. Hence less the mean better is forecast.