Suppose that the last four months of sales were 8, 10, 15, and 9 units, respectively. Suppose further that the last four forecast were 9, 11, 8 and 12 units, respectively. What is the mean absolute deviation (MAD) value of these forecast?

3

Explanation:

Data provided in the question:

Sales for the last four months:

8, 10, 15, and 9 units

Last four forecast of sales:

9, 11, 8 and 12 units

Now,

The mean absolute deviation (MAD) value of these forecast will be calculated as:

MAD = [ ∑|Sales - Forecast sales| ] : [ Total number of forecast ]

or

MAD = [ |8 - 9| + |10 - 11| + |15 - 8| + |9 - 12| ] : 4

or

MAD = [ 1 + 1 + 7 + 3 ] : 4

or

MAD = 12 : 4

or

MAD = 3