The measure of whether a forecast method consistently over- or underestimates demand is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) mean absolute percentage error (MAPE).
D) bias.
E) the tracking signal.

Question

Quizplus · Accepted Answer

Bias is the measure of whether a forecast method consistently over- or underestimates demand. It is the average difference between the forecast and the actual values. MSE, MAD, and MAPE are measures of forecast accuracy but do not specifically indicate the direction of the forecast error. The tracking signal is a measure of forecast bias and can be used to adjust the forecast, but it is not a direct measure of over- or underestimation.

The Measure of Whether a Forecast Method Consistently Over- or Underestimates