A potential problem with this approach is that the lower-volume items (which will usually have higher MAPEs) can dominate the statistic. However, with the Weighted Moving Average you can assign unequal weights to the historical data. Mark Chockalingam http://www.vcpassociates.com [email protected] April 29, 2004 at 6:58 pm #58675 SSNewbyMember @SSNewby Reputation - 0 Rank - Aluminum Mark, I have read your several postings, each of which direct By using this site, you agree to the Terms of Use and Privacy Policy.

Either a forecast is perfect or relative accurate or inaccurate or just plain incorrect. WiedergabelisteWarteschlangeWiedergabelisteWarteschlange Alle entfernenBeenden Wird geladen... If you are working with an item which has reasonable demand volume, any of the aforementioned error measurements can be used, and you should select the one that you and your However, Method 12 also includes a term in the forecasting equation to calculate a smoothed trend.

Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization. Ratio for three periods prior = 1/(n^2 + n)/2 = 1/(3^2 + 3)/2 = 1/6 = 0.1666.. Valid values for beta range from 0 to 1. Home Resources Questions Jobs About Contact Consulting Training Industry Knowledge Base Diagnostic DPDesign Exception Management S&OP Solutions DemandPlanning S&OP RetailForecasting Supply Chain Analysis »ValueChainMetrics »Inventory Optimization Supply Chain Collaboration CPG/FMCG Food

Many thanks Gareth February 2, 2004 at 11:13 pm #53226 Alfred CurleyParticipant @Alfred-Curley Reputation - 0 Rank - Aluminum Did you get an answer to your inquiry? Consulting Diagnostic| DPDesign| Exception Management| S&OP| Solutions Training DemandPlanning| S&OP| RetailForecasting| Supply Chain Analysis: »ValueChainMetrics »Inventory Optimization| Supply Chain Collaboration Industry CPG/FMCG| Food and Beverage| Retail| Pharma| HighTech| Other Knowledge Base This recommendation is specific to each product, and might change from one forecast generation to the next. Wiedergabeliste Warteschlange __count__/__total__ Forecast Accuracy Mean Average Percentage Error (MAPE) Ed Dansereau AbonnierenAbonniertAbo beenden901901 Wird geladen...

The forecast is then calculated using the results of the three equations: D) Figure A-4 Description of "Figure A-4 " Where: L is the length of seasonality (L=12 months or 52 Month 2004 Sales 2005 Sales 2006 Forecast Simulated 2005 Forecast January 125 128 146 February 132 117 158 March 115 115 169 April 137 125 181 May Therefore, it is more desirable to be 95% accurate than to be 110% accurate. By using this site, you agree to the Terms of Use and Privacy Policy.

The system will automatically assign the weights to the historical data that decline linearly and sum to 1.00. If you are working with a low-volume item then the MAD is a good choice, while the MAPE and other percentage-based statistics should be avoided. This is the same as dividing the sum of the absolute deviations by the total sales of all products. Avg. = 2/4 * 137 + 2/4 * 117.3333 = 127.16665 or 127 February Forecast = January Forecast = 127 March Forecast = January Forecast = 127 A.13.2 Simulated Forecast Calculation

Ignore any minus sign. However, forecast bias and systematic errors still do occur when the product sales history exhibits strong trend or seasonal patterns. Let’s start with a sample forecast. The following table represents the forecast and actuals for customer traffic at a small-box, specialty retail store (You could also imagine this representing the foot The following examples show the calculation procedure for each of the available forecasting methods, given an identical set of historical data.

Historically Sales groups have been comfortable using forecast as a denominator, given their culture of beating their sales plan. They do not have to add to 1.0. The curve will be fitted to the three values Q1, Q2, and Q3. Unsourced material may be challenged and removed. (December 2009) (Learn how and when to remove this template message) The mean absolute percentage error (MAPE), also known as mean absolute percentage deviation

Avg. = 2/3 * 114 + 1/3 * 131 = 119.6666 November Sm. This method may be useful when a product is in the transition between stages of a life cycle. All rights reserved. Privacy policy About Wikipedia Disclaimers Contact Wikipedia Developers Cookie statement Mobile view Menu Blogs Info You Want.And Need.

Avg. = 2/4 * 114 + 2/4 * 134 = 124 November, 2004 sales = Sep Sm. Issues[edit] While MAPE is one of the most popular measures for forecasting error, there are many studies on shortcomings and misleading results from MAPE.[3] First the measure is not defined when Avg. = 1 * 114 + 0 * 0 = 114 December Sm. The forecast is composed of a smoothed averaged adjusted for a linear trend.

What is the impact of Large Forecast Errors? These are Mean Absolute Deviation (MAD) and Percent of Accuracy (POA). Error = absolute value of {(Actual - Forecast) = |(A - F)| Error (%) = |(A - F)|/A We take absolute values because the magnitude of the error is more important Anmelden 19 2 Dieses Video gefällt dir nicht?

The MAPE The MAPE (Mean Absolute Percent Error) measures the size of the error in percentage terms. Error close to 0% => Increasing forecast accuracy Forecast Accuracy is the converse of Error Accuracy (%) = 1 - Error (%) How do you define Forecast Accuracy? When comparing several forecasting methods, the one with the smallest MAD has shown to be the most reliable for that product for that holdout period. Most of the people I speak to recommend expressing the difference as a % of Actual - not Forecast. I call this forecast error (as opposed to forecast variation) April 29,

When specified in the processing option, the forecast is also adjusted for seasonality. MAD is a measure of forecast error. There will usually be differences between actual sales data and the simulated forecast for the holdout period. The following examples use the same 2004 and 2005 sales data to produce a 2006 sales forecast.

Both of these performance evaluation techniques require actual sales history data for a user specified period of time. Planning: »Budgeting »S&OP Metrics: »DemandMetrics »Inventory »CustomerService Collaboration: »VMI&CMI »ABF Forecasting: »CausalModeling »MarketModeling »Ship to Share For Students MAPE and Bias - Introduction MAPE stands for Mean Absolute Percent Error - The absolute value in this calculation is summed for every forecasted point in time and divided by the number of fitted pointsn. Linear regression is slow to recognize turning points and step function shifts in demand.

So if Demandplanning reports into the Sales function with an implicit upward bias in the forecast, then it is appropriate to divide by the Actual Sales to overcome this bias. Using Linear regression fits a straight line to the data, even when the data is seasonal or would better be described by a curve.