Actual sales of a product are shown in table below.

Forecast the sales using (i) 3-

month moving average method (ii) 4-month moving average method. Compare the
efficiency of the forcasting methods determining MAD, MSE, MAPE.
3-months moving average method 4-months moving average method
Mont Actual Sale Absolute Error
Error squared |E/A|* Error Absolute |E/A|*
h (Unit) Forecast Error [E] Error (| Forecast squared
(E^2) 100% [E] Error (|E|) 100%
E|) (E^2)
1 1494
2 1483
3 1426
4 1419 1467.67 -48.67 48.67 2368.444 3.43%
5 1418 1442.67 -24.67 24.67 608.44 1.74% 1455.50 -37.50 37.50 1406.25 2.64%
6 1410 1421.00 -11.00 11.00 121.00 0.78% 1436.50 -26.50 26.50 702.25 1.88%
7 1433 1415.67 17.33 17.33 300.44 1.21% 1418.25 14.75 14.75 217.56 1.03%
8 1436 1420.33 15.67 15.67 245.44 1.09% 1420.00 16.00 16.00 256.00 1.11%
9 1481 1426.33 54.67 54.67 2988.44 3.69% 1424.25 56.75 56.75 3220.56 3.83%
10 1402 1450.00 -48.00 48.00 2304.00 3.42% 1440.00 -38.00 38.00 1444.00 2.71%
11 1426 1439.67 -13.67 13.67 186.78 0.96% 1438.00 -12.00 12.00 144.00 0.84%
12 1428 1436.33 -8.33 8.33 69.44 0.58% 1436.25 -8.25 8.25 68.06 0.58%
13 1432 1418.67 13.33 13.33 177.78 0.93% 1434.25 -2.25 2.25 5.06 0.16%
14 1429 1428.67 0.33 0.33 0.11 0.02% 1422.00 7.00 7.00 49.00 0.49%
15 1422 1429.67 -7.67 7.67 58.78 0.54% 1428.75 -6.75 6.75 45.56 0.47%
16 1421 1427.67 -6.67 6.67 44.44 0.47% 1427.75 -6.75 6.75 45.56 0.48%
17 1404 1424.00 -20.00 20.00 400.00 1.42% 1426.00 -22.00 22.00 484.00 1.57%
18 1422 1415.67 6.33 6.33 40.11 0.45% 1419.00 3.00 3.00 9.00 0.21%
19 1453 1415.67 37.33 37.33 1393.78 2.57% 1417.25 35.75 35.75 1278.06 2.46%
20 1451 1426.33 24.67 24.67 608.44 1.70% 1425.00 26.00 26.00 676.00 1.79%
21 1495 1442.00 53.00 53.00 2809.00 3.55% 1432.50 62.50 62.50 3906.25 4.18%
22 1459 1466.33 -7.33 7.33 53.78 0.50% 1455.25 3.75 3.75 14.06 0.26%
23 1425 1468.33 -43.33 43.33 1877.78 3.04% 1464.50 -39.50 39.50 1560.25 2.77%
24 1414 1459.67 -45.67 45.67 2085.44 3.23% 1457.50 -43.50 43.50 1892.25 3.08%
TOTAL 507.67 18741.89 35.33% 468.50 17423.75 32.54%

For 3-months moving average method For 4-months moving average method
n= 21 n= 20
MAD = |E|/n= 24.175 MAD = |E|/n= 23.425
MSE= [E^2]/n= 892.471 MSE= [E^2]/n= 871.1875
MAPE= (|E/A|*100)/n= 1.682% MAPE= (|E/A|*100)/n= 1.627%

RECOMMENDATION: According to our findings, 4-months moving average contains less error than 3-
months moving average. This is why we recomment 4-months moving average method.

SUBMITTED BY:
Tasnia Ahmed
ID: 201711047
Sec-A