Plain definition
Forecast accuracy measures how close a forecast was to the actual outcome using a stated error method and period. It should examine repeated observations, because one accurate month can result from luck or offsetting errors.
Illustrative example
Monetary examples use Saudi riyals (SAR). The same principles apply in other currencies.
A company forecast monthly sales of , , and ; actual sales are , , and . Absolute errors total on actual sales of , giving 9.375% weighted absolute error. The company reviews why each month missed rather than averaging away the direction.
Why it matters
Accuracy determines whether a forecast can safely support staffing, purchasing, and cash decisions. Measuring error over time reveals whether to improve assumptions, data, or incentives.
Practical consequence
Preserve the forecast version used, define the error formula, compare like periods, and separate systematic bias from random variation. Do not reward accuracy by encouraging deliberately broad or low forecasts.