### Comparison of Forecasting MethodsTwo independent methods of forecasting based on judgment and experience have been prepared each month for the past 10 months. The forecasts and actual sales are as follows:| Month | Sales | Forecast 1 | Forecast 2 ||-------|-------|------------|------------|| 1 | 770 | 771 | 769 || 2 | 789 | 785 | 787 || 3 | 794 | 790 | 792 || 4 | 780 | 784 | 798 || 5 | 768 | 770 | 774 || 6 | 772 | 768 | 770 || 7 | 760 | 761 | 759 || 8 | 775 | 771 | 775 || 9 | 786 | 784 | 788 || 10 | 790 | 788 | 788 |#### Exercises:(a) **Compute the MSE and MAD for each forecast. Does either forecast seem superior? Explain.**(b) **Compute MAPE for each forecast.**### Explanation of Terms- **MSE (Mean Squared Error):** A measure of the average of the squares of the errors, which are the differences between observed and predicted values.- **MAD (Mean Absolute Deviation):** A measure of the average absolute deviations from a central point (mean or median).- **MAPE (Mean Absolute Percentage Error):** A measure of prediction accuracy of a forecasting method in statistics. It calculates the average percentage difference of the predicted values from the actual ones.These exercises help in evaluating the performance of different forecasting methods to determine which provides more accurate predictions.

*Answer: Given data Month Sales Forecast1 Forecast 2 1 770 771 769 2 789 785 787 3…

anth Sales Forecast 1 Forecast 2 1 770 771 769 2 789 785 787 3 794 790 792 780 784 798 768 770 774 772 768 770 7 760 761 759 775 771 775 786 784 788 790 788 788 Compute the MSE and MAD for each forecast. Does either forecast seem superior? Explain. - Compute MAPE for each forecast.

anth Sales Forecast 1 Forecast 2 1 770 771 769 2 789 785 787 3 794 790 792 780 784 798 768 770 774 772 768 770 7 760 761 759 775 771 775 786 784 788 790 788 788 Compute the MSE and MAD for each forecast. Does either forecast seem superior? Explain. - Compute MAPE for each forecast.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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