Identify the Formula Used to Calculate the Root Mean Square $=\sqrt{\frac{\sum_{t=1}^{n}\left|A_{t}-F_{t}\right|}{n}}$

question 37

Multiple Choice

Identify the formula used to calculate the root mean square error over a range of forecasted values, if the actual value of the time series at time t and the forecast value for time t are denoted by At and Ft respectively.

• A) RMSE \( =\sqrt{\frac{\sum_{t=1}^{n}\left|A_{t}-F_{t}\right|}{n}} \)
• B) RMSE \( =\sqrt{\frac{\sum_{t=1}^{n} \sqrt{\left|A_{t}-F_{t}\right|}}{n}} \)
• C) RMSE \( =\sqrt{\frac{\sum_{t=1}^{n}\left(\lambda t-F_{t}\right)^{2}}{n}} \)
• D) RMSE \( =\sqrt{\frac{\sum_{t=1}^{n}\left|\frac{A_{t}+F_{t}}{2}\right|}{n}} \)

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Definitions:

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process, used for calculating labor costs and efficiency.

Plantwide Predetermined Overhead

An overhead rate calculated for an entire manufacturing plant, applied to all products regardless of the specific department in which they were produced.

Machine-Hours

A measure of production activity that quantifies the number of hours machines are operated in the manufacturing process.

Mark Up

The percentage added to the cost price of goods to cover overhead and profit.