Chapter 4, Problem 23P

Question

•• 4.23 Sales of quilt covers at Bud Banis’s department store in Carbondale over the past year are shown below. Management prepared a forecast using a combination of exponential smoothing and its collective judgment for the 4 months (March, April, May, and June):

MONTH	UNIT SALES	MANAGEMENT’S FORECAST
July	100
August
September	96
October	110
November	124
December	119
January	92
February	83
March	101	120
April	96	114
May	89	110
June	108	108

1. a. Compute MAD and MAPE for management’s technique.
2. b. Do management’s results outperform (i.e., have smaller MAD and MAPE than) a naive forecast?
3. c. Which forecast do you recommend, based on lower forecast error?