Answer: Mean squared error = 8.0
Explanation:
GIVEN the following ;
Actual and forecasted values for 5 months:
Actual : 12, 13, 10, 11, 9
Forecast: 11, 10, 8, 6, 8
To calculate mean squared error(MSE)
Number of observations = 5
Error =( Actual - forecat)
Error =(12 - 11) + (13 - 10) + (10 - 8) + (11 - 6) + (9 - 8)
Squared Error = 1^2 + 3^2 + 2^2 + 5^2+ 1^2 = 1 + 9 + 4 + 25 + 1
Squared error = 1 + 9+ 4 + 25 + 1 = 40
Mean squared error (MSE) = (Squared error ÷ number of observations)
Mean squared error = 40 ÷ 5
Mean squared error = 8.0
