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# BUS 173 Lecture 12 - PowerPoint PPT Presentation

WMA. BUS 173 Lecture 12. After the second mid, we have looked into: Simple Average Regression Moving Average 3 period 4 period 5 period Accuracy check MAD/MAPE MSE. So far…. You have decided to use Simple moving average, for 3 periods. Calculate the MSE and MAPE for the method.

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### BUS 173 Lecture 12

So far…

You have decided to use Simple moving average, for 3 periods. Calculate the MSE and MAPE for the method.

Calculate the forecast for the next three days

Weighted Moving Average (WMA)

• Determining weights and periods: periods. Calculate the MSE and MAPE for the method.

• Depends on the person who is calculating the forecast

• Normally 3 – 5 periods are chosen

• To carry out a proper WMA forecasting, you need to have a dialogue with the decision maker

WMA - 2

This is the formula for the three period moving average periods. Calculate the MSE and MAPE for the method.

Formulae for WMA

Example periods. Calculate the MSE and MAPE for the method.

• Focus on Recent Values periods. Calculate the MSE and MAPE for the method.

• Recent one has 50%

• T -2 has a weight of 30%

• T -3 has a weight of 20%

• Further focus on Recent Values

• Recent one has 70%

• T – 2 has a weight of 20%

• T – 3 has a weight of 10%

• How do you determine which forecast is the best?

Weights to Use

Thank You periods. Calculate the MSE and MAPE for the method.