A company has developed a linear trend model to forecast monthly sales.The following data show the actual sales and the "fitted" sales for months 1-12. Based on these data,what is the value for the mean absolute deviation for months 1-12?
A)Approximately 975
B)About 81
C)Nearly 150
D)None of the above

Question

A company has developed a linear trend model to forecast monthly sales.The following data show the actual sales and the "fitted" sales for months 1-12.  Based on these data,what is the value for the mean absolute deviation for months 1-12?
A)Approximately 975 
B)About 81 
C)Nearly 150 
D)None of the above

Quizplus · Accepted Answer

To calculate the mean absolute deviation (MAD), we first need to calculate the absolute deviation (AD) for each month by subtracting the actual sales from the fitted sales. For example, for month 1:
AD = |2000 - 1650| = 350

We do this for all 12 months and calculate the sum of the AD values, which is 970. We then divide by 12 to get the average AD, which is approximately 81. Therefore, the answer is B.

A Company Has Developed a Linear Trend Model to Forecast