Consider the actual and forecast values contained in the table of $8$ periods, which were found using two

forecast approaches $(1)$ and $(2).$ Which approach would you choose and why?

Actual Forecast Actual Forecast

$11102624\mathrm{.}5$

$13123027\mathrm{.}2$

$1716\mathrm{.}32929\mathrm{.}9$

$19193232\mathrm{.}6$

Actual Forecast Actual Forecast

$1110\mathrm{.}82625\mathrm{.}5$

$1313\mathrm{.}23028\mathrm{.}8$

$17162929\mathrm{.}1$

$1919\mathrm{.}13232$

Solution: Using MAD, the absolute value of the total forecast error $=8\mathrm{.}3.($Do actual$-$forecast of each of

the $8$ forecasts and take the absolute value and sum them$).$ Thus, MAD $=8\mathrm{.}3/8=1\mathrm{.}03.$

For the second approach, MAD $=3\mathrm{.}3/8=0\mathrm{.}4$