Question

You check your forecast for the past three periods and you notice that your forecast is 10 units above the actual demand for all the three periods. Then you conclude that the tracking signal for your forecast is equal to

A) 1/3

B) 2/3

C) 1

D) 0

E) None of the above

Answer 1

The forecast is 10 units above the actual demand for all the three periods

So the forecast errors i. e Actual value - forecasted value for all the three periods are - 10

The absolute errors I. e absolute value of error for all the three periods are 10

MAD = Sum of the absolute errors for all the periods / number of periods = (10+10+10)/3 = 30/3 = 10

Tracking signal = Cumulative Sum of errors / MAD

= [(-10)+(-10)+(-10)] / 10

= - 30/10

= - 3

So the answer is option E None of the above