Consider the following forecast errors.What is the Mean Absolute Deviation (MAD)?
$$\begin{array} { | c | c | }
\hline \text { Period } & \text { Error } \
\hline 1 & - 2 \
\hline 2 & 1 \
\hline 3 & 3 \
\hline 4 & 0 \
\hline 5 & - 1 \
\hline 6 & 2 \
\hline 7 & 4 \
\hline
\end{array}$$
A)1
B)1.86
C)7
D)13
E)5

Question

Consider the following forecast errors.What is the Mean Absolute Deviation (MAD)?
$$\begin{array} { | c | c | } 
\hline \text { Period } & \text { Error } \
\hline 1 & - 2 \
\hline 2 & 1 \
\hline 3 & 3 \
\hline 4 & 0 \
\hline 5 & - 1 \
\hline 6 & 2 \
\hline 7 & 4 \
\hline
\end{array}$$
A)1
B)1.86
C)7
D)13
E)5

Quizplus · Accepted Answer

To find MAD, we need to take the absolute value of each error, sum them up, and then divide by the number of periods.

Absolute errors: 2, 1, 3, 0, 1, 2, 4

Sum of absolute errors: 2+1+3+0+1+2+4=13

Number of periods: 7

MAD = (Sum of absolute errors) / (Number of periods) = 13/7 ≈ 1.86

Therefore, the answer is B.

Consider the Following Forecast Errors A)1 B)1

Consider the Following Forecast Errors A)1
B)1