Question

Sales for boxes of Girl Scout cookies over a 4-month period were forecasted as follows: 100, 120, 115, and 126. The actual results over the 4-month period were as follows: 110, 114, 119, 115. What was the MAD of the 4-month forecast?

	5
	0
	108
	7
	None of the above

Answer 1

MAD means the Mean Absolute Deviation. Mean absolute deviation is calculated by actual value minus forcasting value all periods divided by number of periods. We take the absolute value of the difference. So we are not bother about sign of difference . So MAD = SUM OF (ACTUAL VALUE - FORCASTING VALUE) / NO OF PERIODS. We will take the absolute value of the difference. Here total number of periods is 4 because here data is given for 4 months.

Now forecasing value of 4 months are 100, 120, 115 and 126. Now actual value value for the 4 months are 110, 114, 119 and 115. So we can say for the first month the absolute deviation is 110 - 100 = 10, for the second monthe devation is 114 - 120 = -6 , absolute deviation is 6. For the third month deviation is 119 - 115 = 4, absolute deviation is also 4. For the 4th monthe the deviation is 115 - 126 = -11, absolute deviation is 11. So total absolute deviation is 10+6+4+11 = 31 and number of periods is 4 . So MAD = 31/4 = 7.75.

MAD = 7.75 , Ans. None of the above

So answer is None of the above. If we take the round up value it will not be 7.