When Brianna calculates her forecasts, she uses a type of forecast error measure that squares each period error so the negative and positive errors don't cancel each other out. Which method is Brianna using?
A) Cumulative sum of forecast errors
B) Exponential smoothing for trends
C) Mean squared error
D) Mean absolute deviation

Question

Quizplus · Accepted Answer

Brianna is using the mean squared error (MSE) method. The MSE measures the average of squares of the errors, which ensures that negative and positive errors do not cancel each other out, as opposed to the mean absolute deviation or cumulative sum of forecast errors methods. The exponential smoothing for trends method is a forecasting technique that uses a smoothing factor to adjust for past errors and trends.

When Brianna Calculates Her Forecasts, She Uses a Type of Forecast