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. Which of the following values reflects the mean absolute deviation for this data?

Question

Quizplus · Accepted Answer

To find the mean absolute deviation (MAD), we first need to find the mean of the actual demand:

Mean = (195 + 210 + 205 + 190 + 220 + 225) / 6 = 207.5

Next, we need to find the absolute deviation for each month:

| 195 - 207.5 | = 12.5
| 210 - 207.5 | = 2.5
| 205 - 207.5 | = 2.5
| 190 - 207.5 | = 17.5
| 220 - 207.5 | = 12.5
| 225 - 207.5 | = 17.5

Now we find the average of these absolute deviations by summing them up and dividing by 6:

MAD = (12.5 + 2.5 + 2.5 + 17.5 + 12.5 + 17.5) / 6 = 12.5

Therefore, the mean absolute deviation is 12.5, which corresponds to choice (B).

A Product Has a Forecast of 200 Units a Month