KNOWLEDGE LIBRARY

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Forecast Accuracy

The most popular measures of forecast accuracy are the algebraic deviation and percentage, the absolute deviation mean and percentage, and the standard deviation of forecast errors.

 

The measures related to the algebraic are as follows:

 

  • Algebraic Deviation = Forecast Demand – Actual Demand
  • Algebraic Deviation Percentage = Algebraic Deviation /Actual Demand

 The measures related to the absolute deviation are as follows:

 

  • Absolute Deviation = |Forecast Demand – Actual Demand|
  • Absolute Deviation Percentage = Absolute Deviation /Actual Demand
  • Mean Absolute Deviation (MAD) =
    Sum of Absolute Deviations over N Periods/N
  • Mean Abolute Deviation Percentage =
    Sum of Absolute Deviation Percentages over N Periods/N
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