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 deviations of each forecast from the actual values:

|10-9.2| = 0.8
|12-10.1| = 1.9
|14-12.3| = 1.7
|16-14.5| = 1.5
|18-16.7| = 1.3

Now, we need to find the mean of these deviations:

(0.8+1.9+1.7+1.5+1.3)/5 = 1.24

The mean absolute deviation is 1.24, which is closest to option D (1.2).

A Forecasting Method Has Produced the Following Over the Past