Consider the actual and forecast values contained in the table. What is the MAD of the forecast?
A)0.60
B)0.65
C)0.70
D)0.75

Question

Consider the actual and forecast values contained in the table.  What is the MAD of the forecast?
A)0.60 
B)0.65 
C)0.70 
D)0.75

Quizplus · Accepted Answer

MAD = Mean Absolute Deviation
MAD = (1/n) * ∑|Actual - Forecast|
MAD = (1/5) * (|0.8 - 1.5| + |1.6 - 1.9| + |1.1 - 1.6| + |1.2 - 0.9| + |0.9 - 0.7|)
MAD = (1/5) * (0.7 + 0.3 + 0.5 + 0.3 + 0.2)
MAD = 0.4 / 5
MAD = 0.08
Therefore, the MAD of the forecast is 0.08 which is closest to option B (0.65).

Consider the Actual and Forecast Values Contained in the Table