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Calculate the forecast error for the given problem.
In order to forecast the attendance at an annual tennis tournament, a model has been developed which uses attendance from the previous year and the amount spent for advertising this year. From the years shown in the table, forecast the attendance for years 2-5 and calculate the forecast error.
Year
Attendance
Advertising Expenditure
Forecast
Error
1
8363
750
2
9426
1250
3
9318
3200
4
10206
4500
5
11018
5600
The multiple regression model is Attendance = 6738 + .23($) + .25 (Attlag)
Note: 'Attlag' means last-year's actual attendance. So in forecasting the second year's attendance, we'd use the first year's actual attendance value, and so forth.
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