Two Forecasting Models Were Used to Predict the Future Values

question 184

Essay

Two forecasting models were used to predict the future values of a time series.These are shown in the accompanying table,together with the actual values. Compute the mean absolute deviation (MAD)and sum of squares for forecast (SSE)for each model to determine which was more accurate.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor, like utilities and depreciation.

Selling Expenses

Costs associated with the marketing and distribution of a company's products or services, including advertising, sales personnel salaries, and commissions.

Direct Materials Cost

The expense incurred for raw materials that are consumed directly in the manufacturing process of a product.

Automobile Manufacturer

A company that produces motor vehicles, including cars, trucks, and buses, for sale on a large scale.