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Forecast Accuracy Measure

RAP Computer assembles personal computers from generic parts it purchases at a discount, and it sells the units via phone orders it receive from customers responding to the company's ad in trade journal. The business has developed an exponential smoothing forecast model to forecast future computer demand. Actual demand for th company's computer for the past 8 months as well as forecast are shown in the following table:

Month Demand Forecast
March 120 -
April 110 120.0
May 150 116.0
June 130 129.6
July 160 129.7
August 165 141.8
September 140 151.1
October 155 146.7
Nov - 150.0

Using a measure of forecast accuracy of your choice, ascertain whether the forecast appears to be accurate

Determine whether a 3- month moving average would provide a better forecast

Solution Preview

Dear student, please refer to the attachment for the ...

Solution Summary

This solution shows the calculation of error, absolute error, three-period moving average forecast, error and absolute error in the attached Excel file. This solution identifies the accuracy of the forecast, which forecast would be better, and why.

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