HP uses X63 chip in their computers and prices for these chips for last 12 months are:
|
Month
|
Jan
|
Feb
|
Mar
|
Apr
|
May
|
Jun
|
July
|
Aug
|
Sep
|
Oct
|
Nov
|
Dec
|
|
Price ($)
|
1.80
|
1.67
|
1.70
|
1.85
|
1.90
|
1.87
|
1.80
|
1.83
|
1.70
|
1.65
|
1.70
|
1.75
|
Forecast next month (i.e. next Jan) sales price using each of the following:
- First use 2-month and then 3-month moving average method to forecast sales price. Using MAD approach, which average is better?
- If the initial Jan forecasts were also $1.80; in an exponential smoothing method, first use a = 0.1 and then a = 0.5; Using MSE approach, which value of a is better to predict sales price?
- In practice, both MAD and MSE can be used to find forecast accuracy giving the same decisions. Why would you choose one over the other? ( Can you explain how to do it by solving, not excel)