The last seven weeks of demand at a new car dealer are shown below. Use a three-period weighted-moving average forecast to determine a forecast for the 8th week using weights of 3, 2, and 1 (where the most recent week receives the highest weight)
(Round all forecasts to the nearest whole unit.) Calculate the MAD for this forecast (covering all weeks in which error comparisons can be made). What does the MAD indicate?
Week Sales
1 25
2 30
3 27
4 31
5 27
6 29
7 30
Week Sales 3WMA |error|
1 25
2 30
3 27
4 31 28 3
5 27 30 3
6 29 28 1
7 30 29 1
8 29
MAD = 8/4 = 2
An MAD of 2 means that the forecasting technique used was typically off by 2 units each period.
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