Question

If the 10 latest forecasting percentage errors are 10%, 5%, 7%, 8%, 5%, -1%, 4%, 6%,...

If the 10 latest forecasting percentage errors are 10%, 5%, 7%, 8%, 5%, -1%, 4%, 6%, 4%, 6%, what is likely to happen? (     )

  1. The current forecasting model is unbiased.
  2. The current forecasting model overestimates the actual value.
  3. The current forecasting model underestimates the actual value.
  4. None of the above.
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Answer #1

We have given the 10 latest forecasting percentage errors are 10%, 5%, 7%, 8%, 5%, -1%, 4%, 6%, 4%, 6%,

From this it can easily observed that error % is positive so it indicates that -

b. The current forecasting model overestimates the actual value

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