The formula for the forecast error, is calculated by using the equation:
A) Actual demand for period t minus the forecasted demand for period t
B) Actual demand for period t divided by the forecasted demand for period t
C) Actual demand for period t plus 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 the forecast error is the difference between the actual demand for a period and the forecasted demand for that same period. Therefore, option A is the correct choice.

Option B does not represent the formula for forecast error as it describes a ratio between the actual and forecasted demand. Option C also does not represent the formula for forecast error as adding the actual and forecasted demand provides no indication of the accuracy of the forecast. Option D calculates the average between actual and forecasted demand, which is not a direct representation of the forecast error.

The Formula for the Forecast Error, Is Calculated by Using