Errors in Forecasting

[Former Member]

Hi Experts

Errors in forecasting helps us for decent accuracy.

We have 6 errors which are MAD,MAPE, MPE, MSE, RMSE & ET.

Can you explain importance of each error in forecasting?

I found MAD and MAPE are used significantly to judge forecast.If we take multiple products in the selection ID which error is use to measure accuracy.What is the significance of MSE,RMSE,MPE.

I tried statistical forecast in DP, the historical data is very random and dynamic,i have taken Historical data for 36 months and generated forecast for 12 months.

The output of the forecast is constant even i tried with different Alpha, Beta & Gama Values.But no use its showing constant forecast.I used Auto Model selection 1 and 2.

But as far as my understanding, system should give same pattern as historical data but in our case system is giving constant forecast.

Please advice.

Regards

Vicky

[Former Member]

On the second part of your question. The auto model 2 may have selected a constant model as the best fit for the data you have. In interative univariant forecasting look at the log messages to see what the system is telling you about what it did. It will tell you what model it selected and if you are lucky why.

George

[Former Member]

Hello

Your question is about Forecast Accuracy Measurements

I give you some information from SAP SCM DP Help about this moment:

Univariate forecasting allows you to measure the forecast error in six ways:

• Mean absolute deviation (MAD)

• Error total (ET)

• Mean absolute percentage error (MAPE)

• Mean square error (MSE)

• Square root of the mean squared error (RMSE)

• Mean percentage error (MPE)

The system calculates the forecast errors by comparing the differences between the actual values and the ex-post values.

Use the forecast error measurements to help you evaluate the accuracy of the forecast.

You select them in the univariate forecast profile. To set upper limits for the forecast error measurements, use the Diagnostic group in the univariate forecast profile; when a limit has been exceeded, the system issues an alert.

You can also select the forecast error measurements on the demand planning desktop, under the Errors tab of the Forecast view.

You can find defenitions and formulas for all this errors in SAP SCM APO DP Help. Search it by term Forecast Accuracy Measurements.

Hope it will help you.

Best regards, Andrey.