demand-planning-mape-bias

[demand-planning-mape-bias]

Demand Planning — Definition of Forecast Error

Forecast Error is the deviation of the Actual from the forecasted quantity.

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 than the direction of the error.

Demand Planning Net specializes in helping businesses improve their planning across their Value Chain. We provide consulting services and solutions implementation for Demand Planning, Integrated Business Planning (IBP), Sales and Operations Planning (S&OP), and Supply Chain Optimization.

To know More, Visit Us:

https://demandplanning.net/

[demand-planning-mape-bias]

Demand Planning — Forecast accuracy in the supply chain

When discussing forecast accuracy in the supply chain, we typically have one measure in mind: the Mean Absolute Percent Error or MAPE. However, there is a lot of confusion between Academic Statisticians and corporate Supply Chain Planners in interpreting this metric. Most academics define MAPE as an average of percentage errors over a number of products. Whether it is erroneous is subject to debate. However, this interpretation of MAPE is useless from a manufacturing supply chain perspective. The following discusses forecast error and an elegant method to calculate meaningful MAPE.

Demand Planning Net specializes in helping businesses improve their planning across their Value Chain. We provide consulting services and solutions implementation for Demand Planning, Integrated Business Planning (IBP), Sales and Operations Planning (S&OP), and Supply Chain Optimization.

To know More, Visit Us:

https://demandplanning.net/

[demand-planning-mape-bias]

Demand Planning - MAPE and Bias – Introduction

MAPE stands for Mean Absolute Percent Error – Bias refers to persistent forecast error – Bias is a component of total calculated forecast error – Bias refers to consistent under-forecasting or over-forecasting – MAPE can be misinterpreted and miscalculated, so use caution in the interpretation.

Accurate and timely demand plans are a vital component of a manufacturing supply chain. Inaccurate demand forecasts typically would result in supply imbalances when it comes to meeting customer demand. Forecast accuracy at the SKU level is critical for properly allocating resources.

Demand Planning Net specializes in helping businesses improve their planning across their Value Chain. We provide consulting services and solutions implementation for Demand Planning, Integrated Business Planning (IBP), Sales and Operations Planning (S&OP), and Supply Chain Optimization.

To know More, Visit Us:

https://demandplanning.net/