Actual sales in quarters 1 and 2 are 50 and 60, respectively. What is the percentage forecasting error for quarter 2 using a naïve approach?
A) 83.3%
B) 20.9%
C) 16.7%
D) 12.5%
E) none of the above

Question

Quizplus · Accepted Answer

Using a naïve approach, the forecast for quarter 2 would be the actual sales in quarter 1, which is 50. Therefore, the forecast error would be:
|Actual sales in quarter 2 - Forecast sales in quarter 2|/Actual sales in quarter 2
= |60-50|/60
= 10/60
= 16.7% 
Therefore, the best choice is C.

Actual Sales in Quarters 1 and 2 Are 50 and 60