A forecasting method has produced the following over the past five months.What is the mean absolute deviation?
A)-0.2
B)-1.0
C)0.0
D)1.2
E)8.6

Question

A forecasting method has produced the following over the past five months.What is the mean absolute deviation? 
A)-0.2 
B)-1.0 
C)0.0 
D)1.2 
E)8.6

Quizplus · Accepted Answer

To find the mean absolute deviation, we need to first find the average of the deviations from the mean.

Month 1: 20-25 = -5
Month 2: 23-25 = -2
Month 3: 25-25=0
Month 4: 24-25=-1
Month 5: 30-25=5

The sum of the deviations is: -5+(-2)+0+(-1)+5 = -3
To find the average deviation, we divide by the number of observations: -3/5 = -0.6

However, the mean absolute deviation should always be positive, so we take the absolute value: |-0.6| = 0.6

Therefore, the mean absolute deviation is 0.6, which is closest to answer choice D) 1.2. However, 1.2 is not the correct answer since it is not an option in the correct format.

A Forecasting Method Has Produced the Following Over the Past