Some measures of forecasting accuracy include mean absolute deviation,mean absolute percentage error,and mean squared error.The formula for each is dependent on the forecast error,which is calculated by using the equation:
A)Actual demand for period t divided by the forecasted demand for period t
B)Actual demand for period t plus the forecasted demand for period t
C)Actual demand for period t minus the forecasted demand for period t
D)The average of Actual demand for period t and forecasted demand for period t

Question

Quizplus · Accepted Answer

The formula for forecast error is calculated by subtracting the actual demand from the forecasted demand, which makes option C the correct choice. Option A would result in a ratio or percentage, not an error value. Option B does not involve subtraction and would result in a sum, not an error value. Option D calculates the average, which is not the same as the forecast error.

Some Measures of Forecasting Accuracy Include Mean Absolute Deviation,mean Absolute