Question

An analyst must decide between two different forecasting techniques for weekly sales of roller blades: a linear trend equation and the naive approach. The linear trend equation is Ft = 124 + 2t, and it was developed using data from periods 1 through 10.
t units sold
11 147
12 148
13 151
14 145
15 155
16 152
17 155
18 157
19 160
20 165
Based on data for periods 11 through 20 as shown in the table, which of these two methods has the greater accuracy if MAD and MSE are used? (Round your answers to 2 decimal places.)
MAD (Naive)=
MAD (Linear)=
MSE (Naive)=
MAD (Linear)=

Answer 1

Answer:

Following are the responses to the given question:

Step-by-step explanation:

Mean Absolute Deviation MAD

$MAD = \sum_{i=1}^{n} \frac{\left | actual_{i}-forecast_{i} \right |}{n}$

Mean squared error  

$MSE=\Sigma^{n}_{i=1} \frac{(Actual_i - Forecast_i)^2}{(n - 1)}$

linear trend equation is $Ft = 124 + 2t$

$MAD = \frac{23}{10} = 2.3\\\\MSE = \frac{91}{9}= 10.11$

Naive method

$MAD = \frac{36}{9} = 4\\\\MSE = \frac{202}{8}=25.25\\\\MAD (Naive) = 4\\\\MAD (Linear) =2.3\\\\MSE (Naive)=25.25\\\\MSE (Linear)=10.11$

Please find the attached file.