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Frequently Asked Questions

Is your supply chain forecasting accurate?

In supply chain management it’s important to be able to measure the accuracy of your demand forecasts. Inaccurate demand forecasting can lead to the accumulation of excess stock or the reverse: issues with product availability. Both are unwelcome problems for inventory planners!

How to calculate forecast accuracy?

The forecast accuracy formula is straightforward : just divide the sum of your errors by the total demand. MAPE is the average percentage of error. The forecast accuracy formula is simply the average of the error percentages: This method is really not recommended, because there is no weighting, neither on quantities nor on values.

How to check the quality of your demand forecast?

One way to check the quality of your demand forecast is to calculate its forecast error. Forecast error is the deviation of the actual demand from the forecasted demand. If you can calculate the level of error in your previous demand forecasts, you can factor this into future ones and make the relevant adjustments to your planning.

How do inventory planners calculate forecast accuracy/forecast error?

There are a number of formulas that inventory planners can use to calculate forecast accuracy/forecast error, from the fairly simple to the quite complex. Two of the most common forecast accuracy/error calculations include MAPE – the Mean Absolute Percent Error and MAD – the Mean Absolute Deviation.

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