The mean absolute deviation (MAD)and the sum of squares for forecast error (SSE)are the most commonly used measures of forecast accuracy.The model that forecasts the data best will usually have the:
A)lowest MAD and highest SSE
B)highest MAD and lowest SSE
C)lowest MAD and SSE
D)highest MAD and SSE

Question

Quizplus · Accepted Answer

The best model will have the lowest MAD and SSE. MAD measures the average absolute difference between the forecasted values and the actual values, while SSE measures the sum of the squared differences between the forecasted values and the actual values. A lower MAD and SSE indicate a better fit of the model to the data. A higher MAD would indicate that the model's forecast values are further away from the actual values, while a higher SSE would indicate greater variability in the forecast errors. Therefore, the correct answer is C.

The Mean Absolute Deviation (MAD)and the Sum of Squares for Forecast