The manager of carpet city outlet needs to make an accurate forecast of demand for soft shag carpet (its biggest seller). If the manager does not order enough carpet from the carpet mill, customers will buy their carpet from one of carpet city’s many competitors. The manager has collected the following demand datafor the past 8 months.
(see attached file for data)
i. compute a 3 month moving average forecast for months 4-9
ii. compute a weighted 3 month moving average forecast for months 4-9 assigning weights of .55, .33, and .12 to the months in sequence, starting with the most recent month.
iii. compare the two forecasts by using MAD. Which forecast appears to be more accurate?
This posting contains solution to following forecasting problem comparing accuarcy of forecasting method based on MAD.