Determine the forecast error rate

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Reference no: EM132883619

Question - You are given the following budgeted and actual data for the Grey Company for each of the months January through June of the current year.

In December of the prior year, sales were forecasted as follows: January, 107 units; February, 102 units; March, 109 units; April, 114 units; May, 121 units; June, 129 units. In January of the current year, sales for the months February through June were reforecasted as follows: February, 97 units; March, 109 units; April, 109 units; May, 111 units; June, 124 units. In February of the current year, sales for the months March through June were reforecasted as follows: March, 104 units; April, 109 units; May, 106 units; June, 124 units. In March of the current year, sales for the months April through June were reforecasted as follows: April, 109 units; May, 101 units; June, 114 units. In April of the current year, sales for the months May and June were reforecasted as follows: May, 91 units; June, 109 units. In May of the current year, sales for June were reforecasted as 109 units.

Actual sales for the six-month period, January through June, were as follows: January, 110 units; February, 97 units; March, 112 units; April, 110 units; May, 118 units; June, 134 units.

Required -

1. Do a schedule of forecasted sales, on a rolling basis, for the months January through June, inclusive. (Hint: There will be only one forecasted number for January-this is the forecast done in December. For February, there will be two forecasts: one done in December and a second done in January. For June, there will be six forecasts, one done in each of the preceding six months.)

2. For each of the months March through June, determine the 3-month forecast error rate, defined as 1 minus the absolute percentage error. For example, the forecast error rate for March's sales is found by dividing the absolute value of the forecast error for this month by the actual sales volume for the month. The forecast error for any month (e.g., March) is defined as the difference between the actual sales volume for the month and the sales volume for that month forecasted 3 months earlier (e.g., December). Also, indicate for each month whether the actual sales volume was above or below the forecasted volume generated three months earlier.

Reference no: EM132883619

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