Question

In: Economics

1. The MAD for a forecast is one unit per week. If the lead time is...

1. The MAD for a forecast is one unit per week. If the lead time is one month, what will be the standard deviation of the forecast error for one month (assuming 4 weeks in a month). Please enter your answer to two decimal places.

2. The MAD for a forecast is one unit per week. If the lead time is one year, what will be the standard deviation of the forecast error for one year (assuming 52 weeks in a year). Please include at least two decimal places in your answer.

Solutions

Expert Solution

Answer (1) : The MAD for a forecast is one unit per week for one month ( assuming 4 weeks), i.e.

                        The data available for us is : 1 , 1 , 1, 1

Now, 1+1+1+1 = 4

  • 4/4 =1
    1. = 0

02= 0

Similarly, for the other three values too, the square will be 0.

The addition and square and the mean of this will also be 0

The square root of Zero (0) will also be 0.

Therefore, the standard deviation here will also be 0.

Answer (2) : The MAD for a forecast is one unit per week for one year ( assuming 52 weeks) , i.e.                        The data available for us is : 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1 , 1 , 1 , 1, 1

Now, 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 + 1+1+1+1 = 52

  • 52/52 =1

       1-1= 0

02= 0

Similarly, for all the other 51 values too, the square will be 0.

The addition and square and the mean of this will also be 0

The square root of Zero (0) will also be 0.

Therefore, the standard deviation here will also be 0.


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