Two measures of forecast accuracy include:
A) Mean deviation
B) Mean absolute deviation
C) Mean square error
D) a and c
E) b and c

Question

Quizplus · Accepted Answer

Mean absolute deviation (MAD) is a measure of forecast accuracy that calculates the average absolute difference between the actual and forecasted values. This measure gives an idea about the magnitude of errors but does not reveal the direction of the error.

Mean square error (MSE) is another measure of forecast accuracy that is calculated as the average of the squared differences between actual and forecasted values. MSE gives an idea about the magnitude of errors as well as the direction of the error.

Therefore, the best choice would be Mean Absolute Deviation (MAD) and Mean Square Error (MSE) as they provide a comprehensive picture of forecast accuracy.

Two Measures of Forecast Accuracy Include