Certified Production & Operations Manager (POM) Practice Exam

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Given forecast errors of 5, 0, -4, and 3, what is the mean absolute deviation?

The correct answer is: 3

To find the mean absolute deviation (MAD), one must first calculate the absolute value of each forecast error. The given forecast errors are 5, 0, -4, and 3. Calculating the absolute values: - The absolute value of 5 is 5. - The absolute value of 0 is 0. - The absolute value of -4 is 4. - The absolute value of 3 is 3. Now, sum these absolute values: 5 + 0 + 4 + 3 = 12. Next, to find the mean absolute deviation, divide this total by the number of errors. There are four errors, so we divide 12 by 4: 12 / 4 = 3. Thus, the mean absolute deviation is 3. This calculation highlights the average magnitude of the forecast errors, providing a measure of forecasting accuracy. The correct answer reflects the proper method for determining the mean absolute deviation by taking the average of the absolute errors.