Asked by Clara McNulty on May 13, 2024
Verified
Mean absolute deviation (MAD) is a good metric of forecast accuracy because it shows whether a forecast is above or below actual demand.
Mean Absolute Deviation
A statistical measure used to quantify the spread or variability in a data set, indicating the average absolute difference from the mean.
MAD
Mean Absolute Deviation, a measure used in statistics to quantify the average absolute dispersion or deviation from the mean or average.
- Understand the essence of mean absolute deviation (MAD) and bias as metrics of forecast accuracy.
Verified Answer
HD
Hayley DouglasMay 14, 2024
Final Answer :
False
Explanation :
Mean absolute deviation (MAD) measures the average distance between each forecasted value and the actual value, regardless of direction (above or below). Therefore, it does not indicate whether the forecast is above or below actual demand.
Learning Objectives
- Understand the essence of mean absolute deviation (MAD) and bias as metrics of forecast accuracy.