Identify the Formula Used to Calculate the Root Mean Square $\sqrt { \frac { \sum _ { t = 1 } ^ { n } \left| A _ { t } - F _ { t } \right| } { n } }$

question 43

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 = \(\sqrt { \frac { \sum _ { t = 1 } ^ { n } \left( A _ { t } - F _ { t } \right) ^ { 2 } } { n } }\)
• D)RMSE = \(\sqrt { \frac { \sum _ { t = 1 } ^ { n } \left| \frac { A _ { t } - F +{ t } } { 2 } \right| } { n } }\)

---

Definitions:

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.

Environmental Scanning

The process of collecting, analyzing, and using information about trends, events, and relationships in an organization's external environment to assist in planning.

Firm's Control

The extent to which a business can influence or dictate its operational environment, including internal processes and external market conditions.

Sociocultural Changes

Alterations in the social and cultural aspects of a society, which can impact consumer behavior, business practices, and market trends.