Mean Average Deviation (MAD)

Mean Average Deviation (MAD) is an exponential average of errors between forecasted sales and actual sales, regardless of whether the errors are positive or negative. It is a measure of the normal variation of the data for that SKU. Statistically, four times MAD is the outer band where only 1% of the points are expected to fall outside this range. So, new sales data in excess of this level is highly suspicious and most likely does not represent normal sales history.