Which Method Would You Recommend in Selecting the Appropriate Forecasting

question 100

Multiple Choice

Which method would you recommend in selecting the appropriate forecasting model if avoiding large errors is extremely important?

• A)Mean absolute deviation (MAD).
• B)Either Mean absolute deviation (MAD) or Sum of squares for forecast error (SSE).
• C)Sum of squares for forecast error (SSE).
• D)Neither Mean absolute deviation (MAD) or Sum of squares for forecast error (SSE)

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Definitions:

Efficiency

The ratio of the output gained from a system to the input used, typically expressed as a percentage indicating performance or productivity.

Expected Monetary Value

A statistical measure used in decision-making under uncertainty, calculating the average outcome when future events have varying monetary values.

Profit

The financial gain achieved when the amount earned from goods or services exceeds the amount spent on their production or provision.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in financial analysis to assess investment opportunities.