Compute the mad of forecast errors

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Reference no: EM133070430

Question - 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 below 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

FORECAST DEMAND

ACTUAL DEMAND

1

140

137

2

140

133

3

140

150

4

140

160

5

140

180

6

150

170

7

150

185

8

150

205

Required -

a. Compute the MAD of forecast errors.

b. Using the RSFE, compute the tracking signal.

c. Based on your answers to a and b, comment on Harlen's method of forecasting.

Reference no: EM133070430

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