Final answer:
Forecast bias describes whether we are on average forecasting too high or low.
Step-by-step explanation:
When we talk about whether we are on average forecasting too high or too low, we are referring to a concept called forecast bias. Forecast bias measures the systematic tendency of forecasts to be consistently higher or lower than the actual values.
It is important to identify and correct any forecast bias to improve the accuracy of predictions. For example, if we consistently predict higher sales than what actually occur, it indicates a positive forecast bias. On the other hand, if our predictions are consistently lower than the actual sales, it suggests a negative forecast bias.
Forecast bias can be analyzed by comparing the average forecasted values to the average actual values. Conversely, if the average forecasted values are consistently lower, it suggests a negative forecast bias.