Which method would you recommend in selecting the appropriate forecasting model if avoiding large errors is extremely important?
A)Mean absolute deviation (MAD).
B)Either Mean absolute deviation (MAD) or Sum of squares for forecast error (SSE).
C)Sum of squares for forecast error (SSE).
D)Neither Mean absolute deviation (MAD) or Sum of squares for forecast error (SSE)

Question

Quizplus · Accepted Answer

Sum of squares for forecast error (SSE) is a measure of the total error made for a set of predictions, making it the best choice when avoiding large errors is extremely important. MAD is only concerned with the average error, whereas SSE takes into account the magnitude of each error. Therefore, option C is the most appropriate choice.

Which Method Would You Recommend in Selecting the Appropriate Forecasting