An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:
$$\begin{array} { | c | c | }
\hline \text { Year } & \text { \# Sald } \
\hline 4 \text { years ago } & 10,000 \
\hline 3 \text { years ago } & 12,000 \
\hline \text { 2 years ago } & 18,000 \
\hline \text { Last year } & 20,000 \
\hline
\end{array}$$
The previous trend line has predicted 18,500 for two years ago, and 19,700 for last year. What was the mean absolute deviation for these forecasts?
A) 100
B) 200
C) 400
D) 500
E) 800

Question

An operation analyst is forecasting this year's demand for one of his company's products based on the following historical data:
$$\begin{array} { | c | c | } 
\hline \text { Year } & \text { \# Sald } \
\hline 4 \text { years ago } & 10,000 \
\hline 3 \text { years ago } & 12,000 \
\hline \text { 2 years ago } & 18,000 \
\hline \text { Last year } & 20,000 \
\hline
\end{array}$$
The previous trend line has predicted 18,500 for two years ago, and 19,700 for last year. What was the mean absolute deviation for these forecasts?
A) 100
B) 200
C) 400
D) 500
E) 800

Quizplus · Accepted Answer

The mean absolute deviation (MAD) is calculated by taking the absolute differences between the actual and forecasted values, summing them, and dividing by the number of observations. Here, the absolute differences are |18,000 - 18,500| = 500 and |20,000 - 19,700| = 300. The MAD is (500 + 300) / 2 = 400.

An Operation Analyst Is Forecasting This Year's Demand for One