Answered: WEEK 1 maner 234567 ∞ 8 FORECAST DEMAND…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Operations Management CH 3

Question 14

Harlen Industries has a simple forecasting model: Take the actual demand for the same month last year and divide that by the number of fractional weeks in that month. This gives the average weekly demand for that month. This weekly average is used as the weekly forecast for the same month this year. This technique was used to forecast eight weeks for this year, which are shown in the following tables along with the actual demand that occurred.

The following eight weeks show the forecast (based on last year) and the demand that actually occurred:

WEEK
12345
6
7
8
FORECAST
DEMAND
135
135
135
Week
1
2
3
4
5
6
7
8
134
134
144
155
156
a. Compute the MAD of forecast errors.
Note: Round your answers to 2 decimal places.
ACTUAL
DEMAND
132
128
150
160
180
170
185
205
MAD

Expert Solution

Step 1

MAD is the proportion between total absolute error values and the number of weeks considered to calculate the forecasting demand. Considering the given values, we can identify the MAD like given below.