1. CHAPTER: 12 FORECASTING (MSC 301) MD. TAMZIDUL ISLAM FACULTY, BBS

2. Forecast Error 2  Two Types:  Bias Errors  Random Errors  Forecast Error is the difference between the forecast and actual demand for a given period. E t =D t -F t

3. Forecast Error 3  Cumulative Forecasting Error (CFE)  Mean Squared Error (MSE)  Standard Deviation  Mean Absolute Deviation (MAD)  Mean Absolute Percentage Error (MAPE)

5. Classroom Exercise 5 PeriodActual Demand D t Forecast F t June80 104 July110 99 August115 101 September105 104 October110 104 November125 105 December120 109 Total Error E t =D t -F t Absolute Error IE t I Absolute Percentage Error (IE t I/ D t ) (100%) -2424 30.0% 11 10.0 14 12.2 11 0.9 66 5.4 20 16.0 11 9.2 398783.7% MAD=87/7=12.4 and MAPE=83.7%/7=11.9%

6. 6 The following table shows the actual sales of a product and the forecasts made for each of the last eight months. Calculate CFE, MAD, MAPE, MSE and SD to measure forecasting error and comment on each of the results: Classroom Exercise MonthsDemand (Dt) Forecast (Ft) 1200225 2240220 3300285 4270290 5230250 6260240 7210250 8275240 Total Error (Et) IEtIError squared Absolute percentage error -252562512.5 20 4008.3 15 2255.0 -20204007.4 -20204008.7 20 4007.7 -4040160019.0 35 122512.7 -15195527581.3% CFE:-15 MAD:195/8=24.4 MAPE:81.3/8=10.2% MSE: 5275/8=659.4 SD=√5275/8=25.7

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