A time series with forecast values and error terms is presented in the following table. The mean absolute deviation (MAD)for this forecast is ___________.
A) 3.54
B) 7.41
C) 4.43
D) 17.72
E) 4.34

Question

A time series with forecast values and error terms is presented in the following table. The mean absolute deviation (MAD)for this forecast is ___________. 
A) 3.54 
B) 7.41 
C) 4.43 
D) 17.72 
E) 4.34

Quizplus · Accepted Answer

To calculate MAD, we need to take the absolute value of the forecast error and then take the average of these absolute errors. Using the given values, the absolute errors are:

|5-4|=1
|6-7| = 1
|8-6|=2
|10-11|=1
|12-12|=0

So, the average of these absolute errors is (1+1+2+1+0)/5 = 1.

Therefore, the MAD for this forecast is 1, which corresponds to choice C.

A Time Series with Forecast Values and Error Terms Is