The Department Manager Using a Combination of Methods Has Forecast

question 82

Essay

The department manager using a combination of methods has forecast sales of toasters at a local department store. Calculate the MAD for the manager's forecast. Compare the manager's forecast against a naive forecast. Which is better?
$$\begin{array} { | c | c | c | } \hline \text { Month } & \text { Unit Sales } & \frac { \text { Manager's } } { \text { Forecast } } \\\hline \text { January } & 52 & \\\hline \text { February } & 61 & \\\hline \text { March } & 73 & \\\hline \text { April } & 79 & \\\hline \text { May } & 66 & \\\hline \text { June } & 51 & \\\hline \text { July } & 47 & 50 \\\hline \text { August } & 44 & 55 \\\hline \text { September } & 30 & 52 \\\hline \text { October } & 55 & 42 \\\hline \text { November } & 74 & 60 \\\hline \text { December } & 125 & 75 \\\hline\end{array}$$

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Definitions:

Price Change

An alteration in the amount charged for a good or service, which can be due to various factors including cost fluctuations, demand shifts, or competitive strategies.

Lost Profits

Lost profits refer to the income that a business could have earned but was unable to due to disruptions, such as competition or natural disasters.

Expected Success

The anticipation of achieving a favorable outcome in any given venture or activity, often quantified based on objective criteria or previous performances.

Representativeness

A cognitive bias in decision-making where an individual assesses the likelihood of an event by comparing it to an existing prototype in their mind.