Period Actual Demand Forecast Demand Error ... RSFE MAD t TS Start up Start Up Start Up 15 1 30 45 2 43 3 38 4 37 40

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Calculate the Tracking Signal(RSFE/MAD t) given the following data and an alpha=0.4.MAD t-1=15:
Period     Actual Demand  Forecast Demand      Error ...................                              RSFE          MAD t      TS
0                   Start  up                    Start Up                               Start Up                                           15
1                   30                               45
2                   43
3                   38
4                   37
5                   40
# Substitute for Mandatory Problem #2 on Exam

Calculate the Tracking Signal (RSFE/MAD\(_t\)) given the following data and an alpha = 0.4, MAD\(_{t-1}\) = 15:

| Period | Actual Demand | Forecast Demand | Error | RSFE | MAD\(_t\) | TS |
|--------|---------------|-----------------|-------|------|----------|----|
| 0      | Start Up      | Start Up        | Start Up |      | 15       |    |
| 1      | 30            | 45              |       |      |          |    |
| 2      | 43            |                 |       |      |          |    |
| 3      | 38            |                 |       |      |          |    |
| 4      | 37            |                 |       |      |          |    |
| 5      | 40            |                 |       |      |          |    |

### Explanation:

- **Period**: A specific time interval in the sequence of measurements.
- **Actual Demand**: The real demand recorded for each period.
- **Forecast Demand**: The predicted demand made at the start of each period.
- **Error**: The discrepancy between the actual and forecasted demand.
- **RSFE (Running Sum of Forecast Errors)**: The cumulative sum of the forecast errors over time.
- **MAD\(_t\) (Mean Absolute Deviation at time t)**: A measure of the average absolute forecast errors up to period \(t\).
- **TS (Tracking Signal)**: A ratio that indicates whether the forecast is keeping pace with actual demand, calculated as RSFE divided by MAD\(_t\).
Transcribed Image Text:# Substitute for Mandatory Problem #2 on Exam Calculate the Tracking Signal (RSFE/MAD\(_t\)) given the following data and an alpha = 0.4, MAD\(_{t-1}\) = 15: | Period | Actual Demand | Forecast Demand | Error | RSFE | MAD\(_t\) | TS | |--------|---------------|-----------------|-------|------|----------|----| | 0 | Start Up | Start Up | Start Up | | 15 | | | 1 | 30 | 45 | | | | | | 2 | 43 | | | | | | | 3 | 38 | | | | | | | 4 | 37 | | | | | | | 5 | 40 | | | | | | ### Explanation: - **Period**: A specific time interval in the sequence of measurements. - **Actual Demand**: The real demand recorded for each period. - **Forecast Demand**: The predicted demand made at the start of each period. - **Error**: The discrepancy between the actual and forecasted demand. - **RSFE (Running Sum of Forecast Errors)**: The cumulative sum of the forecast errors over time. - **MAD\(_t\) (Mean Absolute Deviation at time t)**: A measure of the average absolute forecast errors up to period \(t\). - **TS (Tracking Signal)**: A ratio that indicates whether the forecast is keeping pace with actual demand, calculated as RSFE divided by MAD\(_t\).
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