Question

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.

Answer 1

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.