BUSINESS ADMINISTRATION
BUSINESS ANALYTICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Mean absolute error
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Mean forecast error
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Mean squared error
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Mean absolute percentage error
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Detailed explanation-1: -A simple measure of forecast accuracy is the mean or average of the forecast error, also known as Mean Forecast Error. In this example, calculate the average of all the forecast errors to get mean forecast error: The MFE for this forecasting method is 0.2.
Detailed explanation-2: -MAPE: Mean Absolute Percentage Error is the most widely used measure for checking forecast accuracy. It comes under percentage errors which are scale independent and can be used for comparing series on different scales.
Detailed explanation-3: -Examples: Mean Absolute Deviation (MAD), Mean Squared Error (MSE), Root Mean Square Error (RMSE), Error Total (ET) or Total Absolute Error (TAE).
Detailed explanation-4: -Bias, mean absolute deviation (MAD), and tracking signal are tools to measure and monitor forecast errors. See Bias in forecasting; Forecasting guidelines and methods; Forecasting in manufacturing management; Mean absolute deviation; Tracking signal.