Use a 2 year and 3 year moving average, then compare

At the end of year 6 Air Canada would like to forecast

how many flights they will have to Cancun Mexico the
following year. They gathered flight data from the last
6 years to help with the forecast

2 year 3 year
Absolute
value of
Year Flights Forecast error Year
1 60 1
2 62 2
3 64 61 3 3
4 64 63 1 4
5 65 64 1 5
6 67 64.5 2.5 6
7 66 7

sum of errors 7.5 sum of errors

MAD 1.875 MAD

What forecast method is better? The 2-year forecast is better since it has a lower value.
Why? Because, when the mean absolute deviation is high, it means that a lot of the data points are fart
Therefore, the greater the MAD, the more unpredictable the data are.
 Absolute
Flights Forecast value of error
60
62
64
64 62 2
65 63.3333333 1.6666666667
67 64.3333333 2.6666666667
65.3333333

6.333333
2.111111

a lower value.
a lot of the data points are farther away from the mean.
2 year weighted moving average

At the end of year 6 Air Canada would like to forecast

how many flights they will have to Cancun Mexico the
following year. They gathered flight data from the last 6
years to help with the forecast
2 year weighted moving average

Absolute value weight for most weight for oldest

Year Flights Forecast of error recent period period
1 60 0.9 0.1
2 62
3 64 62 2
4 64 64 0
5 65 64 1
6 67 65 2
7 67

sum of errors 5.2

MAD 1.3

Is this forecast method better than moving average? Yes, the two-year weighted moving average method
Why? As the predictability is more stable since it has lower MAD.
Additionally, a weighted average can be more valuable than a regular average since it provides more de
Data that isn't critical to the end result is reduced in value, allowing the more important data to have a
moving average method is better.

ce it provides more detail.

ortant data to have a greater impact on the outcome.