A Manager Wants to Choose One of Two Forecasting Alternatives

question 123

Essay

A manager wants to choose one of two forecasting alternatives. Each alternative was tested using historical data. The resulting forecast errors for the two are shown in the table. Analyze the data and recommend a course of action to the manager. $$\begin{array} { l r r r r r r r r r } \text { Period (t) } & 1 & 2 & 3 & 4 & 5 & 6 & 7 & 8 & 9 \\\text { Alt. \#1 } & 3 & - 2 & 0 & 2 & 1 & - 2 & 2 & - 1 & 2 \\\text { Alt.\#2 } & 4 & 3 & - 3 & - 1 & 1 & - 1 & 0 & 1 & 0\end{array}$$

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Definitions:

Quantity Of Output

The measure of production volume produced by a business, sector, or economy within a specified time frame.

Accounting Break-even

Accounting Break-even is the point at which a company's revenues exactly cover its expenses, excluding financing costs and taxes.

Contribution Margin

The selling price per unit minus the variable cost per unit, used to determine how sales affect net income.