## Related questions with answers

Harlen Industries has a simple forecasting model: Take the actual demand for the same month last year and divide that by the number of fractional weeks in that month. This gives the average weekly demand for that month. This weekly average is used as the weekly forecast for the same month this year. This technique was used to forecast eight weeks for this year, which are shown as follows, along with the actual demand that occurred.

The following eight weeks show the forecast (based on last year) and the demand that actually occurred:

$\begin{array}{ccc} \text { Week } & \begin{array}{c} \text { Forecast } \\ \text { Demand } \end{array} & \begin{array}{c} \text { Actual } \\ \text { Demand } \end{array} \\ \hline 1 & 140 & 137 \\ 2 & 140 & 133 \\ 3 & 140 & 150 \\ 4 & 140 & 160 \\ 5 & 140 & 180 \\ 6 & 150 & 170 \\ 7 & 150 & 185 \\ 8 & 150 & 205 \\ \hline \end{array}$

a. Compute the MAD of forecast errors.

b. Using the RSFE, compute the tracking signal.

c. Based on your answers to parts (a) and (b), comment on Harlen's method of forecasting.

Solution

VerifiedThe question above demands to find out the tracking signal, to find out that whether the technique used by Harlen Industries gives accurate results or not. The question is divided into two parts, finding the MAD in the first part and tracking the signal in the second part. Let’s solve the question

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