You are hired as a consultant to advise a small firm on forecasting methodology.Based on your research you find the company has a MAD of 3.Its wants to have a 99.7 percent control limits on its forecasting system.It's most recent tracking signal value is 15.What should be your report to the company?
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)The company is using an inappropriate forecasting methodology

Question

Quizplus · Accepted Answer

A MAD of 3 indicates a good level of forecasting accuracy. However, the tracking signal value of 15 is outside the 99.7 percent control limits, indicating that the forecasting model is not performing within acceptable limits. Therefore, the correct recommendation would be to advise the company that its forecasting model is out of control and needs to be corrected.

You Are Hired as a Consultant to Advise a Small