The COO tells you that they consider average loss (combined from overestimation and underestimation of forecast) as
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The COO tells you that they consider average loss (combined from overestimation and underestimation of forecast) as the average of the two losses. For example, if underestimation costs $1000 per item and overestimation costs $1200 per item, the average loss is ($1000+$1200)/2=$1100. Using this information, estimate approximately on an average .how much money you can save yearly for the company as compared to the analyst's forecast? This estimate should be based on historical data and not the future.
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078110894
6th Edition
Authors: Edmonds, Tsay, olds
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