1. What is Forecast Accuracy?

Definition: Forecast accuracy measures how close forecasted values are to actual observed values, expressed as a percentage.

Purpose: It helps businesses evaluate the effectiveness of their forecasting methods and make improvements.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Forecast — Predicted value
• Actual — Observed or real value
• |Forecast - Actual| — Absolute difference between forecast and actual

Explanation: The formula calculates the percentage accuracy by comparing the forecast error relative to the actual value.

3. Importance of Forecast Accuracy

Details: Accurate forecasting helps in inventory management, resource allocation, budgeting, and strategic planning across various industries.

4. Using the Calculator

Tips: Enter both forecast and actual values. The actual value must be non-zero. Higher percentage indicates better accuracy.

5. Frequently Asked Questions (FAQ)

Q1: What does 100% accuracy mean?
A: 100% means the forecast perfectly matches the actual value. This is rare in practice.

Q2: Can accuracy be negative?
A: Yes, negative accuracy occurs when the forecast error exceeds the actual value (forecast is more than double the actual).

Q3: What's considered good accuracy?
A: This varies by industry, but generally 80-95% is considered good for most business forecasts.

Q4: Why use absolute value in the formula?
A: Absolute value ensures we measure the magnitude of error regardless of whether forecast was too high or too low.

Q5: How to improve forecast accuracy?
A: Use better data, more sophisticated models, consider seasonality, and regularly update forecasts with new information.