In selecting an appropriate forecasting model,the following approaches are suggested:
A)Perform a residual analysis.
B)Measure the size of the forecasting error.
C)Use the principle of parsimony.
D)All of the above.

Question

Quizplus · Accepted Answer

Performing a residual analysis, measuring the size of the forecasting error, and using the principle of parsimony are all important approaches when selecting an appropriate forecasting model. Residual analysis helps to evaluate the accuracy of the model by comparing the actual values to the predicted values. Measuring the size of the forecasting error helps to measure the degree of accuracy of the model. Using the principle of parsimony means selecting the simplest model that adequately represents the data, as simpler models are generally easier to interpret and less prone to overfitting. Therefore, all of these approaches are necessary to select the best forecasting model.

In Selecting an Appropriate Forecasting Model,the Following Approaches Are Suggested