The Following Is the List of MAD Statistics for Each

question 85

Multiple Choice

The following is the list of MAD statistics for each of the models you have estimated from time-series data: $$\begin{array} { | l | c | } \hline \text { Model } & \text { MAD } \\\hline \text { Linear Trend } & 1.38 \\\hline \text { Quadratic Trend } & 1.22 \\\hline \text { Exponential Trend } & 1.39 \\\hline A R ( 2 ) & 0.71 \\\hline\end{array}$$ Based on the MAD criterion, the most appropriate model is

• A) exponential trend.
• B) linear trend.
• C) AR(2).
• D) quadratic trend.

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Definitions:

Business Operations

The activities that businesses engage in on a day-to-day basis to increase the value of the enterprise and earn a profit.

EOQ

Economic Order Quantity, a formula used to determine the optimal quantity of inventory to order that minimizes total inventory costs.

Fixed Ordering Costs

Fixed ordering costs are consistent expenses incurred in the process of ordering inventory or supplies, regardless of the order size.

Material Cost

The expense incurred to purchase or produce the raw materials used in manufacturing a product.