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Sales of? Volkswagen's popular Beetle have grown steadily at auto dealerships in Nevada during the past...

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General Management

Sales of? Volkswagen's popular Beetle have grown steadily atauto dealerships in Nevada during the past 5 years? (see tablebelow).??????????????????????????????????????????????????

Year

Sales

1

455

2

502

3

516

4

555

5

590

?a) Forecasted sales for year 6 using the trend projection?(linear regression) method are 620.5 sales ?(round yourresponse to one decimal? place).

b) What is the MAD?

The MAD for a linear regression forecast is ______ sales?(round your response to one decimal? place).

c) What is the? MSE?

The MSE for the linear regression forecast is _______sales?(round your response to one decimal? place).

Answer & Explanation Solved by verified expert
4.2 Ratings (650 Votes)

Calculation of MAD
Year Sales (x) (y) Deviation Absolute Deviation
absolute sales forecasted sales x-y |x-y|
1 455 620.5 -165.5 165.5
2 502 620.5 -118.5 118.5
3 516 620.5 -104.5 104.5
4 555 620.5 -65.5 65.5
5 590 620.5 -30.5 30.5
484.5 =total of absolute deviation'
MAD = (Sum of |x-y|)/n = 484.5/5 = 96.9
Calculation of MSE
Year Sales (x) (y) Deviation Squared Error
absolute sales forecasted sales x-y (x-y)^2
1 455 620.5 -165.5 27390.25
2 502 620.5 -118.5 14042.25
3 516 620.5 -104.5 10920.25
4 555 620.5 -65.5 4290.25
5 590 620.5 -30.5 930.25
57573.3 =total of squared error'
MSE = (Sum of {x-y}^2)/n = 57573.3/5 = 11514.66
With both MAD and MSE, the lower the score, the better

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