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In this problem, you are to test the validity of your forecasting model. Here are the forecasts for a model you have been using and the actual demands that occurred: a. Use the method stated in the text to compute the MAD and tracking signal for each week. (Negative values should be indicated by a minus sign. Round your “Tracking Signal” to 1 decimal place and all other answers to the nearest whole number.)
Expert Answer
A.
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Question & Answer: In this problem, you are to test the validity of your forecasting model. Here are the forecasts for…..
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| Week | Forecast | Actual | Deviation | RSFE | Absolute deviation | Sum of absolute deviation | MAD | TS |
| 1 | 750 | 880 | -130 | -130 | 130 | 130 | 130 | -1 |
| 2 | 830 | 980 | -150 | -280 | 150 | 280 | 140 | -2 |
| 3 | 930 | 1030 | -100 | -380 | 100 | 380 | 127 | -3 |
| 4 | 930 | 880 | 50 | -330 | 50 | 430 | 108 | -3.1 |
| 5 | 980 | 880 | 100 | -230 | 100 | 530 | 106 | -2.2 |
| 6 | 955 | 1030 | -75 | -305 | 75 | 605 | 101 | -3.0 |
| Overall MAD = average of the sum of absolute deviation = 605/6 = 101 (approx.) | ||||||||
| TS = Sum of errors/ MAD = -305/100.833 = -.3.02 or -.3 | ||||||||
