Sustainability and Social Justice

Development of a Practical and Effective Forecasting Performance Measure

Document Type

Article

Abstract

Forecasting is a vital part of the planning process of most private and public organizations. A number of extant measures: Mean Absolute Deviation (MAD), Mean Square Error (MSE) and Mean Absolute Percentage Error (MAPE), have been used to assist in judging the forecast accuracy, and con-comitantly, the consequences of those forecasts. In this paper we introduce, evolve, and implement a practical and effective method for assessing the accuracy of forecasts, the Percent Forecast Error (PFE). We test and evaluate the PFE, and modified optimized PFE (MOPFE), against the MAD, MSE, and MAPE measures of forecast accuracy using three time series datasets.

Publication Title

Advances in Business and Management Forecasting

Publication Date

1-1-2017

Volume

12

First Page

103

Last Page

118

ISSN

1477-4070

DOI

10.1108/S1477-407020170000012007

Keywords

forecast accuracy, Forecasting, forecasting performance measures

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