Question

The Given forecast errors of 5, 0, –4 and 3, what is the mean absolute deviation :

A. 4
B. 3
C. 2.5
D. 2
E. 1

Answer 1

The mean absolute deviation, calculated by averaging the absolute values of the given forecast errors (5, 0, -4, and 3), is 3. Answer choice B is correct.

Step-by-step explanation:

Calculating the Mean Absolute Deviation

To calculate the mean absolute deviation (MAD), we follow these steps:

1. Find the absolute value of each forecast error.
2. Sum these absolute values.
3. Divide the sum by the total number of errors to find the mean.

The forecast errors given are 5, 0, -4, and 3. Taking the absolute values, we have 5, 0, 4, and 3. The sum of these absolute values is 5 + 0 + 4 + 3 = 12. There are 4 forecast errors, so to find the mean, we divide 12 by 4, which equals 3.

The mean absolute deviation is therefore 3. The correct answer is B. 3.