Question

Given the following historical demand and forecast, calculate the Mean Absolute Percentage Error: Week 1 Demand: 50 Forecast: 49 Week 2 Demand: 54 Forecast: 50 Week 3 Demand: 58 Forecast: 63
FE = D-F n FE RSFE RSFE = 27=1 FE; MFE = n n (FE;) 21-1|FEil MSE = MAD = n n FE; 2i=1 =FE TS = RSFE MAPE n MAD MAD about 6.0%
A. about 2.0%
B. about 18.0%
C. about 4.3%
D. about 1.00%

Answer 1

Answer:

A. about 2.0%

Explanation:

The forecasted error for week 1 is 1%. The demand for week 1 is 50 while estimated demand or forecast was 49. The difference between the two values is 1. The forecasted demand for week 2 is 50 while actual demand for week 2 is 54. The difference between the forecast and actual value is 4. The difference in week 3 is 5. Mean absolute deviation is 6% which means there can be 6% standard deviation from the forecasted values.

Answer 2

The error in Mean Absolute Percentage would be as follows:

A). about 2.0%

What is the Mean Absolute Percentage?

Given that,

Week 1

The error in the forecast = 1%

Demand  = 50

Forecasted demand = 49

The difference in the estimated demand and actual demand = 50 -49 = 1

Week 3

The error in the forecast = 1%

Demand  = 58

Forecasted demand = 63

The difference in the estimated demand and actual demand = 63 - 58 = 5

Also,

Mean deviation $= 6%$%

This implies that the standard deviation in the three values is of $6$%.

∵ 2% is the error

Thus, option A is the correct answer.

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