Discussion
Considering the actual demand and the forecast for a product given in the table below, the mean forecast error and the mean absolute deviation, respectively, are
| Period | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| Actual demand | 425 | 415 | 420 | 430 | 427 | 418 | 422 | 416 | 426 | 421 |
| Forecast | 427 | 422 | 416 | 422 | 423 | 420 | 419 | 418 | 430 | 415 |
Answer: B
The mean forecast error is 0.8 and the mean absolute deviation is 4.2: 0.8 and 4.2.
The errors (actual minus forecast) for periods 1 to 10 are \(-2, -7, 4, 8, 4, -2, 3, -2, -4, 6\).
\[ \begin{aligned} \text{MFE} &= \tfrac{8}{10} = 0.8 \\ \text{MAD} &= \tfrac{2+7+4+8+4+2+3+2+4+6}{10} = \tfrac{42}{10} = 4.2 \end{aligned} \]
42.0 is the sum of absolute errors before dividing by 10, and 8.0 the sum of errors; the other options use these totals in place of the means.
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