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Demand Planning Newsletter Switch to PDF |
September 2010 / Summer Edition |
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Demand Volatility vs. Forecast Accuracy By Dr. Mark Chockalingam Forecast accuracy and Demand volatility are two
different things, though there is a strong relationship between accuracy and volatility in practice. For the purposes
of this discussion, I want to use just common terminology. Demand volatility does NOT necessarily mean that demand is unpredictable. Demand volatility also does not mean the demand is an ugly scatter of points across the map. For example, the calculated demand volatility for a product could be the result of a highly seasonal demand profile. Such highly seasonal demand can look very pretty on a graph and could be easily predictable by what I call as an extrapolation by hand-drawing. continue reading on ForecastBlog.com! EyeforPharma October 5-6, 2010 4th Annual Pharma Forecasting Excellence 2010
Learn More.... Join us
this October to hear industry case studies & presentations on how to
optimize forecasts and drive your portfolio strategy
into the new decade. This year’s
congress will help you to
forecast and strategically plan for success in new markets. We’ll bring
together expert forecasters and decision makers to provide a complete view
of how to build a solid forecast and use that forecast to drive decision
making. APICS 2010
International
October18th-20th 2010 Achieve excellence
in the New Normal with the 2010 Learning Paths. Celebrate the city
with APICS 2010 events!
Best Western Royal Plaza Hotel & Trade Center, Marlborough, MA Continued.... |
Calculating MAPE – special cases: Obsolete Stock By Dr. Mark Chockalingam When calculating
MAPE what is recommended when actuals are positive but forecast is 0 (for example when
clearing obsolete stock)? Can you make the forecast match the actual quantity so as not
to penalize the forecaster for something that was not forecastable. Is this the correct
way to measure these scenarios? Our recommendation is
to exclude obsolete skus from measurement and in computing aggregate MAPE as a
performance measure for Planners or Sales Manager. Clearing
obsolete stock is a supply management activity not a demand forecasting activity. Demand Plans are externally focused
and are a representation of what the market wants. The obsolescence of stock may be a result of inferior
demand forecasting in the past but has nothing to do with the demand for such stock in the current period.
In essence, there is no demand for that stock – either it is sold for scrap or just donated. Continue
reading on ForecastingBlog.com! New Upcoming Event: In this specialized two-day course, we will explain the
modeling methodology and process behind accurate demand forecasts and how to effectively use promotional information to
arrive at a consensus forecast. The focus will be on demand modeling using statistical techniques, the methodology to perform
model diagnostics, forecast accuracy measurement and the process to incorporate market intelligence. If you are a new demand forecaster or looking to enhance
your knowledge of business forecasting, you cannot afford to miss this opportunity! Get skills you can use at
work Network with peers Add to your credentials
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