# Keyword Analysis & Research: forecasting accuracy formula

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How do you calculate forecast accuracy?

One simple approach that many forecasters use to measure forecast accuracy is a technique called “Percent Difference” or “Percentage Error”. This is simply the difference between the actual volume and the forecast volume expressed as a percentage. Forecast Accuracy (%) = (Actual Value – Forecast Value) ÷ (Actual Value) × 100

What is a good forecast accuracy?

Good demand forecasts are accurate demand forecasts. Today, I’m going to talk about the absolute best metric to use in the forecasting process. Let’s start with a sample demand forecast .

What factors affect forecast accuracy?

An abrupt unexpected change in forecast accuracy is often the result of some underlying event. For example, if unbeknownst to you, a key customer decides to carry a competing product, your first indication might be an unusually large forecast error.

How do you calculate forecast error?

The first step is to calculate the forecast error at the item level. Simply subtract the forecast from the demand for each item. The next step is to retrieve the absolute value of the error calculated earlier (use the =ABS () formula in Excel). Finally, you need to calculate the % of the error, again at the item level.