If we have 5 years of monthly observations,we may use the first four years to develop several competing forecasting models,and then use them to forecast the fifth year.Since we know the actual values in the fifth year,we can choose the technique that results in the most accurate forecast using either the mean absolute deviation (MAD)or the sum of squares for forecast error (SSE).

Question

Quizplus · Accepted Answer

This statement is true. Using a portion of the data to develop competing forecasting models and then using the remaining data to test the accuracy of the models is a common practice in forecasting. MAD and SSE are both commonly used measures of forecast accuracy.

If We Have 5 Years of Monthly Observations,we May Use