Asked by Makayla Caplinger on Jun 19, 2024
Verified
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).
Forecasting Models
Quantitative and qualitative techniques used to predict future events or data points based on historical trends and patterns.
Mean Absolute Deviation
A measure of dispersion in a dataset, calculated as the average distance between each data point and the mean of the data.
Sum of Squares
A measure of the total variability within a data set, calculated by summing the squares of differences from the mean.
- Comprehend the process of developing and evaluating forecasting models using mean absolute deviation (MAD) and sum of squares for forecast error (SSE).
Verified Answer
YA
Yazmine AlvarezJun 22, 2024
Final Answer :
True
Explanation :
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.
Learning Objectives
- Comprehend the process of developing and evaluating forecasting models using mean absolute deviation (MAD) and sum of squares for forecast error (SSE).