Peter Given Following Historical Data Demand 2003 2015 Refer Table 11 Past Company Used N Q34313661

Peter has been given the following historical data for demandfrom 2003 to 2015 (refer to Table 1.1). In the past, the companyhas used a naïve forecasting model. Her boss wants her to forecastdemand for 2016 using a 3-year moving average. However, shebelieves a 5-year moving average may be more accurate. Help Clemdevelop a naïve, a 3-year moving average, and a 5-year movingaverage for demand and decide which forecasting model is moreaccurate (Hint: employing an error measurement such as MAD would beadvisable).

    Table 1.1    

YearDemandYearDemand200330,000201028,000200428,000201129,850200532,000201223,400200623,000201329,750200734,000201427,500200824,000201532,000200931,4002016???

Expert Answer

In the naive forecasting method, the previous year’s demand isthe next year’s forecast. In this way