You Are Hired as a Consultant to Advise a Small

Multiple Choice

You are hired as a consultant to advise a small firm on forecasting methodology. Based on your research, you find the company has a MAD of 3. It wants to have a 99.7 percent control limits on its forecasting system. Its most recent tracking signal value is 15. What should be your report to the company?

A) The forecasting model is operating acceptably.
B) The forecasting model is out of control and needs to be corrected.
C) The MAD value is incorrect.
D) The upper control value is less than 20.
E) The company is using an inappropriate forecasting methodology.