Asked by Zachary Robert on Jun 20, 2024

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When Brianna calculates her forecasts, she uses a type of forecast error measure that squares each period error so the negative and positive errors don't cancel each other out. Which method is Brianna using?

A) Cumulative sum of forecast errors
B) Exponential smoothing for trends
C) Mean squared error
D) Mean absolute deviation

Forecast Error

The difference between the actual outcome and the predicted value in a forecast, indicating the accuracy of forecasting methods.

Squares

Geometrical shapes with four equal sides and four right angles, or multiplications of a number by itself.

Mean Squared Error

A measure of the average squared differences between estimated and actual values, used to evaluate the accuracy of statistical models.

  • Understand and differentiate between various forecast error measures.
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AH
Ammar HameedJun 25, 2024
Final Answer :
C
Explanation :
Brianna is using the mean squared error (MSE) method. The MSE measures the average of squares of the errors, which ensures that negative and positive errors do not cancel each other out, as opposed to the mean absolute deviation or cumulative sum of forecast errors methods. The exponential smoothing for trends method is a forecasting technique that uses a smoothing factor to adjust for past errors and trends.