In selecting an appropriate forecasting model, the following approach is suggested:
A) Use the principle of parsimony.
B) Measure the size of the forecasting error.
C) Perform a residual analysis.
D) all of the above

Question

Quizplus · Accepted Answer

All of the above methods should be used in selecting an appropriate forecasting model. The principle of parsimony suggests choosing the simplest model that adequately explains the data. Measuring the size of the forecasting error allows for evaluating the accuracy of the model. Residual analysis helps to identify any patterns or trends in the error terms, which could indicate that the model is not appropriate for the data. Therefore, all three methods provide complementary information in selecting an appropriate forecasting model.

In Selecting an Appropriate Forecasting Model, the Following Approach Is