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A car rental company is monitoring its daily car rental contract numbers. During last month, daily car rental contracts averaged 100 contracts/day.
While monitoring the forecast values based on simple moving average method (averaging period = 5), the tracking signals are consistently coming out as large positive numbers (i.e., 13.0, 16.9, and 18.5).
What does this mean? What should we do to the forecast model to improve the situation?
Verified Expert
This task provides a clear explanation on Tracking signal concepts. Tracking signal is widely used in forecasting method to determine the forecast accuracy of the model. it is the ration between the Cumulative forecast error and mean absolute deviation. Normally, tracking signal which falls between - 3 MAD and + 3 MAD is considered as good. Any tracking signal value that falls either below or above this range is considered to be critical...
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