Mean Absolute Deviation (MAD), Mean Absolute Error (MAE)
Both the Mean Absolute Deviation (MAD) and the Mean Absolute Error (MAE) refer to the same method for measuring forecast error.
MAD is most useful when linked to revenue, APS, COGS or some other independent measure of value. MAD can reveal which high-value forecasts are causing higher error rates.
MAD takes the absolute value of forecast errors and averages them over the entirety of the forecast time periods. Taking an absolute value of a number disregards whether the number is negative or positive and, in this case, avoids the positives and negatives canceling each other out.
MAD is obtained by using the following formula: