Assume that a time-series forecast is generated for future demand and subsequently it is observed that the forecast method did not accurately predict the actual demand.Specifically,the forecast errors were found to be: Mean absolute percent error = 10%
Cumulative sum of forecast errors = 0
Which one of the statements concerning this forecast is TRUE?
A)The forecast has no bias but has a positive standard deviation of errors.
B)The forecast has a positive bias and a standard deviation of errors equal to zero.
C)The forecast has no bias and has a standard deviation of errors equal to zero.
D)The forecast has a positive bias and a positive standard deviation of errors.

Question

Quizplus · Accepted Answer

The fact that the cumulative sum of forecast errors is zero indicates that the forecast has no bias. The mean absolute percent error (MAPE) of 10% indicates that the forecast has some level of error or variability. A positive standard deviation of errors would mean that the errors fluctuate around the mean and are not evenly distributed. Therefore, option A is correct, indicating that the forecast has no bias but has a positive standard deviation of errors.

Assume That a Time-Series Forecast Is Generated for Future Demand