What is the Mean Absolute Deviation (MAD) of the last four months' sales and forecasts given the sales of 8, 10, 15, and 9 units and forecasts of 5, 6, 11, and 12 units?

To calculate the Mean Absolute Deviation (MAD), you first need to determine the absolute deviations of the sales from the forecasts for each month.

1. For each month, subtract the forecast from the actual sales to get the absolute deviation:

   • Month 1: |8 - 5| = 3
   • Month 2: |10 - 6| = 4
   • Month 3: |15 - 11| = 4
   • Month 4: |9 - 12| = 3

2. Next, sum these absolute deviations:

   • Total Absolute Deviation = 3 + 4 + 4 + 3 = 14

3. Finally, divide the total absolute deviation by the number of months (which is 4 in this case) to calculate the MAD:

   • MAD = Total Absolute Deviation / Number of Months = 14 / 4 = 3.5

This calculation shows that the correct answer is indeed 3.5, reflecting how much the forecasts deviate from the actual sales on average, which is a critical measure in assessing the accuracy of forecasts in supply chain and operations management. This measure helps managers understand the reliability of their