SCENARIO 16-10
Business closures in a city in the western U.S.from 2007 to 2012 were:
Microsoft Excel was used to fit both first-order and second-order autoregressive models,resulting in the following partial outputs:

-Referring to Scenario 16-10,the values of the MAD for the two models indicate that the first-order model should be used for forecasting.

Question

SCENARIO 16-10
Business closures in a city in the western U.S.from 2007 to 2012 were:
  Microsoft Excel was used to fit both first-order and second-order autoregressive models,resulting in the following partial outputs:

-Referring to Scenario 16-10,the values of the MAD for the two models indicate that the first-order model should be used for forecasting.

Quizplus · Accepted Answer

The Mean Absolute Deviation (MAD) is a measure of forecast accuracy, and a lower MAD value indicates a better model. The decision to use the first-order model should be based on comparing the MAD values of both models, not just the values themselves.

SCENARIO 16-10 Business Closures in a City in the Western U.S.from 2007