Consider the following to answer the question(s) below:
A company has developed a linear trend model to forecast monthly sales. The following data show the actual sales and the "fitted" sales for months 1-12.

-Based on these data, what is the mean square error (MSE) for the linear trend model?
A) 7976.167
B) 95714
C) 81.33
D) 976
E) none of the above

Question

Consider the following to answer the question(s) below:
A company has developed a linear trend model to forecast monthly sales. The following data show the actual sales and the "fitted" sales for months 1-12.
 
-Based on these data, what is the mean square error (MSE) for the linear trend model?
A) 7976.167 
B) 95714 
C) 81.33 
D) 976 
E) none of the above

Quizplus · Accepted Answer

The MSE for the linear trend model is the average of the squared differences between the observed values and the predicted values. The observed values are given by the data points, and the predicted values are given by the linear trend model. The squared differences are calculated by taking the difference between each observed value and the corresponding predicted value, squaring the difference, and then averaging the squared differences. The MSE for the linear trend model is 7976.167.

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