While evaluating recent demand forecasts, Caleb discovered that his company made an error, resulting in a stockout. Which type of forecast error calculation is he using that reveals this information?
A) MAD
B) CFE (bias)
C) MAPE
D) MSE

Question

Quizplus · Accepted Answer

The CFE or bias calculation measures the tendency of a forecast to consistently overestimate or underestimate actual demand. A stockout implies that the forecast was too low, indicating a bias towards underestimating demand. Therefore, the CFE or bias calculation would reveal this error. MAD, MAPE, and MSE are measures of forecast accuracy, but do not directly indicate whether a stockout occurred.

While Evaluating Recent Demand Forecasts, Caleb Discovered That His Company