A company has calculated its running sum of forecast errors to be 500, and its mean absolute deviation is exactly 35. Which of the following is the company's tracking signal?
A) Cannot be calculated based on this information
B) About 14.3
C) More than 35
D) Exactly 35
E) About 0.07

Question

Quizplus · Accepted Answer

Tracking signal = Running sum of forecast errors / (MAD * Number of periods). 
Given that running sum of forecast errors = 500 and MAD = 35, we need the number of periods to calculate the tracking signal. Since the number of periods is not given, we cannot calculate precise tracking signal, but we can estimate it based on the options given.

Option B gives a tracking signal of approximately 14.3 [(500/35)/10]. This is a reasonable estimate since tracking signals should typically range between -4 and +4. Therefore, the best choice is B.

A Company Has Calculated Its Running Sum of Forecast Errors