Demand for a Product and the Forecasting Department's Forecast (Naïve

question 5

Multiple Choice

Demand for a product and the forecasting department's forecast (naïve model) for a product are shown below. Compute the mean absolute error. ? $$\begin{array} { | c | c | c | } \hline \text { Period } & \text { Actual Demand } & \text { Forecasted Demand } \\\hline 1 & 12 & -- \\\hline 2 & 15 & 12 \\\hline 3 & 14 & 15 \\\hline 4 & 18 & 16 \\\hline\end{array}$$

• A)1
• B)1.5
• C)2
• D)2.5

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Definitions:

Cash Discount

A reduction in the invoice amount by the seller, offered to the buyer for early payment.

Invoice Date

The date on which an invoice is issued, indicating when a transaction occurred.

Partial Payment

A payment made that is less than the full amount owed at that time.

Cash Discount

A Cash Discount is a reduction in the invoice price offered by a seller to a buyer for prompt payment of their bill.