Question

Using the following data, determine the values of MAD and MSE. Which of these measurements of error seems to yield the best information about the forecasts?

Period	Value	Forecast
1	19.4	16.7
2	23.8	19.4
3	24.2	22.0
4	26.8	24.8
5	29.2	25.9
6	35.5	28.6

MAD = ???

MSE = ???

Answer 1

Solution:

Period	At: Actual Value	Ft: Forecast	|At-Ft|	(At-Ft)2
1	19.4	16.7	2.7	7.29
2	23.8	19.4	4.4	19.36
3	24.2	22	2.2	4.84
4	26.8	24.8	2	4.00
5	29.2	25.9	3.3	10.89
6	35.5	28.6	6.9	47.61

n = number of periods = 6

Thus

Since < , MAD seems to yield the best information about the forecasts.