A product has a forecast of 200 units a month. The actual demand for the past 6 months has been 195, 210, 205, 190, 220, and 225. Calculate the tracking signal for this product's forecast.

Question

Quizplus · Accepted Answer

The tracking signal is calculated as the cumulative sum of forecast errors divided by the mean absolute deviation (MAD). The forecast errors are -5, 10, 5, -10, 20, 25, which sum to 45. The MAD is the average of the absolute errors: (5+10+5+10+20+25)/6 = 12.5. The tracking signal is 45/12.5 = 3.6, which rounds to 6.

A Product Has a Forecast of 200 Units a Month