A Forecaster Is Assessing Two Different Models for Demand

question 15

Essay

A forecaster is assessing two different models for demand. The output from each model and the actual demand data appear in the table. Use MAD and a tracking signal to compare the two models. Which model does a better job of forecasting?
$$\begin{array} { | c | c | c | } \hline \text { Demand } & \text { Model 1 } & \text { Model 2 } \\\hline 52 & 55.0 & 51.0 \\\hline 52 & 54.7 & 51.9 \\\hline 60 & 54.4 & 52.0 \\\hline 56 & 55.0 & 59.2 \\\hline 58 & 55.1 & 56.3 \\\hline 58 & 55.4 & 57.8 \\\hline 52 & 55.6 & 58.0 \\\hline 57 & 55.3 & 52.6 \\\hline 53 & 55.4 & 56.6 \\\hline 57 & 55.2 & 53.4 \\\hline\end{array}$$

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Definitions:

Cash Receipts

Money received by a business from its operations, including cash sales and collections on credit accounts.

Bank Reconciliation

The process of comparing and adjusting the balance of an account as reported by a bank to the balance in a company’s financial records.

Maximum Benefit

The highest possible advantage or gain that can be achieved from a particular action or resource.

Bank Reconciliation

The process of matching and comparing figures from accounting records against those presented on a bank statement to ensure consistency and correctness.