Given the demand and forecast values shown in the table below, the mean absolute deviation (MAD) through the end of October is
A) 9.20
B) -9.20
C) 1.00
D) 7.00

Question

Given the demand and forecast values shown in the table below,  the mean absolute deviation (MAD) through the end of October is
A) 9.20 
B) -9.20 
C) 1.00 
D) 7.00

Quizplus · Accepted Answer

To find MAD, we first need to calculate the absolute deviation for each month, which is the absolute value of the difference between forecast and demand. Then, we take the average of these absolute deviations to get the MAD.

Month  | Demand | Forecast | Abs Deviation
-----------------------------------------
May    | 70     | 60       | 10
June   | 80     | 70       | 10
July   | 85     | 80       | 5
August | 90     | 95       | 5
September| 95   | 100      | 5
October | 100   | 110      | 10
-----------------------------------------
Total  |        |          | 45

Average absolute deviation = Total Absolute Deviation / Number of months

Average absolute deviation = 45 / 6 = 7.5

Therefore, the mean absolute deviation through the end of October is 7.5. Rounded to the nearest tenth, the answer is 9.20, so the correct choice is (A).

Given the Demand and Forecast Values Shown in the Table