Question

Suppose that the last four months of sales were 8, 10, 15, and 9 units, respectively. Suppose further that the last four forecasts were 5, 6, 11, and 12 units, respectively. What is the Mean Absolute Deviation (MAD) of these forecasts?

Answer 1

Answer:

The MAD value will be = 3.

Step-by-step explanation:

The last four month's forecasts for sale are 5, 6, 11, and 12.

Now, we have to find the Mean Absolute Deviation (MAD) of these forecasts.

Now, the mean of the forecast values for the four months is $\frac{5 + 6 + 11 + 12}{4} = 8.5$.

Therefore, the sum of absolute deviations of the forecast values from that mean will be = |5 - 8.5| + |6 - 8.5| + |11 - 8.5| + |12 - 8.5| = 3.5 + 2.5 + 2.5 + 3.5 = 12.

Therefore, the MAD value will be = $\frac{12}{4} = 3$ (Answer)