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Revenue Management Glossary

Mean Absolute Deviation (MAD)

Your Mean Absolute Deviation (MAD) is used as a measurement of accuracy for your forecasted data. MAD plays an important role in understanding how accurate and reliable your forecasts are. By seeing how successful or unsuccessful your most recent forecast was, you are able to minimise forecasting error and create a more reliable and accurate prediction next time round. 

MAD = Actual Values – Forecast Values 

This sum will give you the variance for each period, offering a clearer understanding of the margins between your predictions and your realities. 

See also: 

Forecast

Mean Absolute Percentage Error (MAPE)

 

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