Homework SourseDemand for a product and the forecasting departments forecas
Demand for a product and the forecasting department\'s forecast (naïve model) for a product are shown below. Compute the mean squared error.
| Period | Actual Demand | Forecasted Demand |
| 1 | 12 | - - |
| 2 | 15 | 12 |
| 3 | 14 | 15 |
| 4 | 18 | 16 |
Solution
ERRORS = 15-12 = 3
= 14-15 = -1
= 18-16 = 2
square of error = 9,1,4
mean squared error = (9+1+4)/3 = 14/3 = 4.67
