Forecast error is found by subtracting the forecast from the actual demand for a given period.

Question

BlackTom AI · Accepted Answer

The statement to evaluate is: 'Forecast error is found by subtracting the forecast from the actual demand for a given period.'
Option 1: True. If you interpret 'subtracting the forecast from the actual' literally as Actual minus Forecast, then this yields a number that represents how far off the forecast was, with sign indicating whether actual exceeded the forecast (positive) or fell short (negative). However, many forecasting texts and calculators define forecast error as Forecast minus Actual, not Actual minus Forecast, so this option can be considered incorrect depending on the convention being used.
Option 2: False. The conventional definition of forecast error is typically Forecast minus Actual (Error = Forecast − Actual). This means the error is found by subtracting the actual demand from the forecast, not the other way around. Using Forecast − Actual aligns with common error metrics like Mean Signed Error and is the basis for several performance measures where the sign conveys bias (whether forecasts tend to overpredict or underpredict).
Additional nuance: In some contexts, people use Actual − Forecast and then report the magnitude as the absolute error, MAD, or RMSE without regard to sign. When a problem explicitly states a different convention, the interpretation may differ. In this item, the given answer indicates that the statement is not aligned with the standard convention (Forecast − Actual), hence the classification as False.
In summary, the core distinction is the order of subtraction defining the error value and its sign. The conventional approach uses Forecast minus Actual, which makes the statement as written (Actual minus Forecast) not consistent with that common convention.

MGS310001.2025FA Test 02: Chapter 5, 8, 9

Forecast error is found by subtracting the forecast from the actual demand for a given period.

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MGS*3100*01.2025FA Test 02: Chapter 5, 8, 9

Forecast error is found by subtracting the forecast from the actual demand for a given period.

查看解析

登录即可查看完整答案

类似问题

Which strategy is most effective for handling the random component (or “noise”) in a forecast?

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In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

Under the assumptions used in cost-volume-profit analysis, as the activity increases:

更多留学生实用工具

希望你的学习变得更简单

MGS310001.2025FA Test 02: Chapter 5, 8, 9