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Applicability of the Revised Mean Absolute Percentage Errors (MAPE) Approach to Some Popular Normal and Non-normal Independent Time Series

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  • Louie Ren
  • Yong Glasure

Abstract

Commonly used Mean Absolute Percentage Errors (MAPE) and the authors’ revised Mean Absolute Percentage Errors (RMAPE) are applied to measure the forecasting accuracy from different Moving Average Methods for independent time series. Simulation results show that both MAPE and RMAPE can only provide sensitive forecasting accuracy measurements on Moving Average Methods when coefficients of variation (c.v.) are smaller than 0.4 or is much greater than 4.0 for those independent time series. For independent time series with moderate c.v.’s, the complexity from the ratios of MAPE and RMAPE will mislead researchers on distinguishing the forecasting accuracies from different Moving Average Methods. The complexity from the ratios will be released only when the c.v. is very small, or when the c.v. is very large. Therefore, when data are from independent time series, the Mean Absolute Deviation (MAD) reveals valid the forecasting accuracies from various Moving Average Methods, but not from MAPE or RMAPE. Copyright International Atlantic Economic Society 2009

Suggested Citation

  • Louie Ren & Yong Glasure, 2009. "Applicability of the Revised Mean Absolute Percentage Errors (MAPE) Approach to Some Popular Normal and Non-normal Independent Time Series," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(4), pages 409-420, November.
    • Handle: RePEc:kap:iaecre:v:15:y:2009:i:4:p:409-420:10.1007/s11294-009-9233-8
    DOI: 10.1007/s11294-009-9233-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Mean Absolute Percentage Errors (MAPE); Revised Mean Absolute Percentage Errors (RMAPE); Forecasting accuracy; Coefficient of variation (c.v.); Mean Absolute Deviation (MAD); C10 Econometrics; Statistics; M21 Managerial Economics; M00 Business Administration;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General

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