Question

Forecast error is found by subtracting the forecast from the actual demand for a given period. True or False

Answer 1

The correct option is;

True

Step-by-step explanation:

The forecast error provides the estimates of the level of deviation of the forecast from the observed actual demand within a period under study

The forecast error is defined as the difference between the observed actual demand and the forecast demand expressed as a percentage or an absolute value.

Forecast error determination is important to judge the accuracy of a given demand forecast within a specified time frame.

Forecast error is expressed as

Et = Dt - Ft

Where:

E = Forecast error

F = Forecast

D = Demand

t = Time.

Answer 2

True

Step-by-step explanation:

Forecast error can be referred to as the deviation of the actual demand from the forecasted or predicted demand.

In other words, it is the difference between the actual or real and the predicted or forecast value of a time series.

From the definition, we understand that forecast error is all about how much is the difference between what's is been forecasted and the actual value.

Mathematically,

Forecast Error = Actual Value of Demand - Forecasted Value of Demand.

Irrespective of whether the actual prediction is smaller or not; on a more standard term, it is calculated as follows

Forecast Error = ABS (Actual – Forecast)

Where ABS = the absolute value of....

And it always returns a positive value of the expression in brackets