Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN: 9781305627734
Author: Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher: Cengage Learning
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Textbook Question
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Chapter 8, Problem 1P

Consider the following time series data:

Chapter 8, Problem 1P, Consider the following time series data:

Using the naïve method (most recent value) as the forecast

Using the naïve method (most recent value) as the forecast for the next week, compute the following measures of forecast accuracy:

  1. a. Mean absolute error
  2. b. Mean squared error
  3. c. Mean absolute percentage error
  4. d. What is the forecast for week 7?

(a)

Expert Solution
Check Mark
To determine

Find the value of mean absolute error.

Answer to Problem 1P

The mean absolute error is 4.4.

Explanation of Solution

WeekTime Series ValueForecastForecast ErrorAbsolute Value of Forecast Error
118   
21318−55
3161333
41116−55
5171166
61417−33
   Total22

MAE=|er|nk=225=4.4

Thus, the mean absolute error is 4.4.

(b)

Expert Solution
Check Mark
To determine

Obtain the mean squared error.

Answer to Problem 1P

The mean squared error is 20.8.

Explanation of Solution

The mean squared error is obtained as given below:

Absolute Value of Forecast ErrorSquared Forecast Error
525
39
525
636
39
22104

MSE=|er|2nk=1045=20.8

Thus, the mean squared error is 20.8.

(c)

Expert Solution
Check Mark
To determine

Find the mean absolute percentage error.

Answer to Problem 1P

The mean absolute percentage error is 31.88.

Explanation of Solution

The mean absolute percentage error is obtained is given below:

WeekTime Series Value (yi)ForecastForecast Error eiPercentage Error yieiAbsolute percentage Error |yiei|
118    
21318−5−38.4638.46
31613318.7518.75
41116−5−45.4545.45
51711635.2935.29
61417−3−21.4321.43
   Total−51.30159.38

MAPE=i=k+1n|yiei|100nk=159.385=31.88

Thus, the mean absolute percentage error is 31.88.

(d)

Expert Solution
Check Mark
To determine

Obtain the forecast for week 7.

Answer to Problem 1P

The forecast for week 7 is 14.

Explanation of Solution

The forecast for week 7 is obtained as given below:

y^7=y6=14

Thus, the forecast for week 7 is 14.

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Chapter 8 Solutions

Essentials of Business Analytics (MindTap Course List)

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