Question

A company has actual unit demand for three consecutive years of 121, 126, and 135. The respective forecasts for the same three years are 120, 120, and 130. Which is the resulting MAD value that can be computed from this data?

Answer 1

Answer:

4

Explanation:

MAD , an acronym for mean absolute deviation is used to measure the accuracy of prediction by averaging the alleged error.

It is calculated through the average of absolute value.

Actual unit demand for three consecutive years of         121,    126,  135.

Respective forecasts for the same three years are       120,    120,  130

MAD value =(121-120) + (126-120) + (135-130)/3

                  = (1+6+5)/3 =4

Answer 2

Answer:

MAD value is $\frac{32}{3}$

Explanation:

Given that:

Actual unit demand for three consecutive years of         121,    126,  135.

The respective forecasts for the same three years are  120,    120,  130

=> The deviations are(actual - forecast):                             21 ,     6,      5

So the sum of deviations : 21+6+5 = 32

As we know that, to find MAD  we use the formula:

MAD = the sum of deviations / number of years

<=> MAD = 32 / 3 = $\frac{32}{3}$  

Hope it will find you well.