The department manager using a combination of methods has forecast sales of toasters at a local department store. Calculate the MAD, MSE, and MAPE measure of forecast accuracy for the manager's forecast and the naïve forecast. Compare the manager's forecast against a naive forecast covering the same time period. Which forecast method is better given the various measures of forecast?

Month Unit Sales Manager's Forecast Abs. Error Naïve Abs Error
January 52
February 61
March 62
April 55
May 66
June 51
July 57 58
August 58 59
September 61 59
October 62 59
November 63 60
December 63 60

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i. e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?