company has a MAD of 10.Its wants to have a 99.7 percent control limits on its forecasting system.It's most recent tracking signal value is 3.1.What can the company conclude from this information?
A)The forecasting model is operating acceptably
B)The forecasting model is out of control and needs to be corrected
C)The MAD value is incorrect
D)The upper control value is less than 20
E)It is using an inappropriate forecasting methodology

Question

Quizplus · Accepted Answer

The tracking signal value of 3.1 is less than the upper control limit of 3.291 (calculated as 3*10/0.997), indicating that the forecasting model is operating acceptably within the specified control limits. Therefore, the company can conclude that the forecasting model is working correctly.

Company Has a MAD of 10