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Exponential smoothing with w​ = 0.70 has been used to calculate forecast values F based on...

Exponential smoothing with w​ = 0.70 has been used to calculate forecast values F based on the actual demand data Y.

Time Period

Y

F

1

119.5

123.4

2

121.5

120.67

3

122.6

121.251

What is the mean absolute deviation​ (MAD) of the​ forecasts? Round to two decimal places.

math   Statistics-And-Probability   
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Answer #1

The MAD or the mean absolute deviation of the forecasted values is the average value of the absolute error values. To calculate MAD we need to find the error for each time period which is calculated as Y- F, and then we need to find the absolute values of the error values and finally, the mean or the average of the absolute error values gives the MAD.

The following table has the above-stated calculations.

Time Period Y ( Actual value) F ( Forecasted Value) Error Absolute error
1 119.5 123.4 -3.9 3.9
2 121.5 120.67 0.83 0.83
3 122.6 121.251 1.349 1.349
MAD = 2.03

Thus the mean absolute deviation​ (MAD) of the​ forecasts is 2.03

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