Describe Words Using Mad Better Describing Forecast Error Mfe Major Use Really Used Togeth Q34305219

Describe in your own words why using MAD is better fordescribing the forecast error than is the MFE. What is the majoruse of each? Should they really be used together? Why? Or Whynot?

Expert Answer

MAD: Mean Absolute Deviation andMFE: Mean Forecast Error

MAD measures the error in absoluteterms i.e. regardless of direction. Due to this it gives a betteridea of accuracy. On the other hand MFE shows the bias whetherpositive or negative. If value of MFE is greater than 0 model tendsto under forecast and vice versa. If I use MAD and MFE together Iwould have a better idea