Calculating Demand Forecast Accuracy

Demand forecast accuracy is a way of measuring how accurate a forecast of demand was compared to what actually happened. To do this, you take the forecast you made and subtract it from the actual demand that happened. For example, if the forecast was that there would be 5 cars sold this week, and in the end 9 cars were sold, then the forecast accuracy would be 4 cars, because you subtracted the forecast (5 cars) from the actual (9 cars). The accuracy of the forecast is important because it helps companies decide how much stuff to buy and stock, and how much of the staff they need to hire.