Based on the above table, calculate the mean absolute deviation (MAD).

Based on the above table, calculate the mean absolute deviation (MAD).

A . -25
B . 6.25
C . 18.75
D . 20

View Answer

Answer: B

Explanation:

The mean absolute deviation (MAD) is a measure of variability that indicates the average distance between observations and their mean. MAD uses the original units of the data, which simplifies interpretation. Larger values signify that the data points spread out further from the average. Conversely, lower values correspond to data points bunching closer to it. The mean absolute deviation is also known as the mean deviation and average absolute deviation1.

The formula for the mean absolute deviation is the following:

MAD=(|XCX|)/N

Where:

• X = the value of a data point

• X = the mean of the data points

• |X C X| = the absolute deviation of a data point from the mean

• N = the number of data points

• = the summation symbol

Based on the table, we can calculate the MAD as follows:

• X=(80+50+50+75)/4=63.75

• |X C X| = |80 – 63.75|, |50 – 63.75|, |50 – 63.75|, |75 – 63.75| = 16.25, 13.75, 13.75, 11.25

• MAD = (16.25 + 13.75 + 13.75 + 11.25) / 4 = 6.25

Therefore, the correct answer is B.

References: = 1 CPIM Part 2 Exam Content Manual, Domain 3: Plan and Manage Demand, Task 3.1: Develop, validate, and review demand plans, p. 23.