BUSINESS ADMINISTRATION
BUSINESS ANALYTICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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takes a positive value when the forecast is too high
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cannot be negative
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cannot be zero
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is associated with measuring forecast accuracy
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Detailed explanation-1: -Forecast error is the difference between the actual and the forecast for a given period. Forecast error is a measure forecast accuracy. There are many different ways to summarize forecast errors in order to provide meaningful information to the manager.
Detailed explanation-2: -Forecast accuracy metrics are measurements that show the reliability of a forecast, which is a prediction of future trends based on historical data. These types of metrics measure the forecast error, which is the difference between an actual value and its expected forecast.
Detailed explanation-3: -A forecast “error” is the difference between an observed value and its forecast. Here “error” does not mean a mistake, it means the unpredictable part of an observation.
Detailed explanation-4: -For measuring accuracy, we compare the existing data with the data obtained by running the prediction model for existing periods. The difference between the actual and predicted value is also known as forecast error. Lesser the forecast error, the more accurate our model is.
Detailed explanation-5: -There is probably an infinite number of forecast accuracy metrics, but most of them are variations of the following three: forecast bias, mean average deviation (MAD), and mean average percentage error (MAPE).