The measure of forecast error where the average absolute error of each forecast is shown as a percentage of demand is
A)mean squared error (MSE).
B)mean absolute percentage error (MAPE).
C)bias.
D)the tracking signal.

Question

Quizplus · Accepted Answer

Mean absolute percentage error (MAPE) is the measure of forecast error where the average absolute error of each forecast is shown as a percentage of demand. It is a commonly used measure in forecasting because it allows for comparison across different data sets and different scales of measurement. MSE and bias are other measures of forecast error, but they do not take into account the percentage of error relative to demand. The tracking signal is a measure of how well the forecast is tracking actual results over time, but it is not a measure of forecast error in and of itself.

The Measure of Forecast Error Where the Average Absolute Error