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The demand and forecast of an item for five months are given in the table.

Month Demand Forecast
April 225 200
May 220 240
June 285 300
July 290 270
August 250 230

The Mean Absolute Percent Error (MAPE) in the forecast is ___________% (round off to two decimal places).

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Best answer

Concept:

Mean Absolute Percentage Error (MAPE):

Mean absolute percentage error (MAPE)

\(MAPE= \frac{{\mathop \sum \nolimits_{i = 1}^n \left| {\frac{{D_i - F_i}}{{D_i}}} \right|}}{n} \times 100 = \frac{{\mathop \sum \nolimits_{i = 1}^n \left| {\frac{{E_i}}{{D_i}}} \right|}}{n} \times100 \)

Calculation:

Given:

Period

Actual Demand

(Di)

Forecasted Demand

(Fi)

Absolute Percentage Error

Ei = (Di - Fi)

April

225

200

25

May

220

240

-20

June

285

300

-15

July

290

270

20

August

250

230

20

 

Mean Absolute Percentage Error (MAPE):

\(MAPE = \frac{{\mathop \sum \nolimits_{i = 1}^n \left| {\frac{{D_i - F_i}}{{D_i}}} \right|}}{n} \times 100 \)

\( \therefore \frac{{\left| {\frac{{ 25}}{{225}}} \right| + \left| {\frac{{ - 20}}{{220}}} \right| + \left| {\frac{{ - 15}}{{285}}} \right| + \left| {\frac{{ 20}}{{290}}} \right| + \left| {\frac{{20}}{{250}}} \right|}}{5} \times 100 =8.072\; \% \)

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