Consider the Sales Data for the BAS Company in the Previous

question 77

Short Answer

Consider the sales data for the BAS Company in the previous problem. For parts (C) to (E), use only the data from April to December.
A) Use a 3-month weighted moving average to forecast the sales for the months April to December. Use weights of (3/6), (2/6), and (1/6) giving more weight to more recent data.
B) Use exponential smoothing with α = 0.6 to forecast the sales for the months April to December. Assume that the initial forecast for January was 22 million.
C) Compare the performance of the two methods by using the mean absolute deviation as the performance criterion. Which method would you recommend?
D) Compare the performance of the two methods by using the mean absolute percentage error as the performance criterion. Which method would you recommend?
E) Compare the performance of the two methods by using the mean squared error as the performance criterion. Which method would you recommend?

• A) Use a 3-month weighted moving average to forecast the sales for the months April to December. Use weights of (3/6), (2/6), and (1/6) giving more weight to more recent data.
• B) Use exponential smoothing with α = 0.6 to forecast the sales for the months April to December. Assume that the initial forecast for January was 22 million.
• C) Compare the performance of the two methods by using the mean absolute deviation as the performance criterion. Which method would you recommend?
• D) Compare the performance of the two methods by using the mean absolute percentage error as the performance criterion. Which method would you recommend?
• E) Compare the performance of the two methods by using the mean squared error as the performance criterion. Which method would you recommend?

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Definitions:

Mortgage

A loan secured by real property, typically real estate, that the borrower is obliged to pay back with a predetermined set of payments.

Compounded Monthly

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Compounded Monthly

An interest calculation method where the interest earned each month is added to the principal, becoming the base for calculating future interest.

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