Demand for a product and the forecasting department's forecast (naïve model) for a product are shown below. Compute the mean absolute error. ?
? $$\begin{array} { | c | c | c | }
\hline \text { Period } & \text { Actual Demand } & \text { Forecasted Demand } \
\hline 1 & 12 & - \
\hline 2 & 15 & 12 \
\hline 3 & 14 & 15 \
\hline 4 & 18 & 16 \
\hline
\end{array}$$
A)1
B)1.5
C)2
D)2.5

Question

Demand for a product and the forecasting department's forecast (naïve model) for a product are shown below. Compute the mean absolute error. ?
? $$\begin{array} { | c | c | c | } 
\hline \text { Period } & \text { Actual Demand } & \text { Forecasted Demand } \
\hline 1 & 12 & - \
\hline 2 & 15 & 12 \
\hline 3 & 14 & 15 \
\hline 4 & 18 & 16 \
\hline
\end{array}$$
A)1
B)1.5
C)2
D)2.5

Quizplus · Accepted Answer

The mean absolute error (MAE) is calculated by taking the average of the absolute errors between the actual and forecasted demand. The errors are |15-12|=3, |14-15|=1, |18-16|=2. The MAE is (3+1+2)/3 = 2.

Demand for a Product and the Forecasting Department's Forecast (Naïve