1 MAD for the naive forecast sales round your response to

1. MAD for the naive forecast = ?? sales (round your response to two decimal places).

2. MAPE for the forecast developed by the naive approach = ?? % (round your response to two decimal places).

b) Using the Naive Method, the forecast for period March through June is (round your response to two decimal places) Month Unit Sales Naive Forecast Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 102 97 95 110 124 119 95 8100 9889 110 84 100 98 89

Solution

Using a naive method the forecast for a period = actual value for the immediately previous period. So using this method the forecast for March through June is

1) MAD = Sum of the absolute deviation for all the periods / number of periods

Where absolute deviation = absolute value of deviation

Deviation = actual value - forecasted value

So using the above formula the deviation and absolute deviation for March through June are

MAD = (16+2+9+21)/4 = 48/4 = 12.00

2) MAPE = Sum of the absolute percentage errors for all the periods / number of periods

Where absolute percentage error = (absolute deviation / actual value) 100

The absolute deviation for all the periods are calculated in part 1.so the absolute percentage errors for March through June are

MAPE = (16%+2.04%+10.11%+19.09%) / 4

= 47.24% / 4

= 11.81%