Question

The following are monthly actual and forecast demand levels for May through December for units of a product manufactured by the D. Bishop Company in Des Moines:

  

Month	Actual Demand		Forecast Demand
May	108		104
June	80		100
July	112		99
August	112		101
September	105		100
October	106		106
November	125		102
December	115		111

For the given forecast, the tracking signal = ___ MADs (round your response to two decimal places).

Answer 1

MAD = mean absolute deviation

Calculating the mad as below -

Month	Actual Demand	Forecasted Demand	Absolute Deviation
May	108	104	4
June	80	100	20
July	112	99	13
August	112	101	11
September	105	100	5
October	106	106	0
November	125	102	23
December	115	111	4
		Sum	80
		MAD	10

MAD = 10

Tracking Signal = Accumulated Forecast Errors / Mean Absolute Deviation = 80/10 = 8

Hence, Tracking Signal = 8 MADs