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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 to forecast eight weeks for this year, which are shown below along with the actual demand that occurred.
The following eight weeks show the forecast (based on last year) and the demand that actually occurred:
FORECAST DEMAND
1 145 142
2 144 138
3 135 144
4 145 154
5 135 174
6 145 164
7 145 180
8 147 200
a. Compute the MAD of forecast errors.
b. Using RSFE, compute the tracking signal.
c. Based on your answers to parts (a) and (b), comment on Harlen's method of forecasting.
d. Suggest a forecast model that is better than Harlen's one. Compare the MAD of both models.
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