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Calculating demand forecast accuracy is the process of determining the accuracy of forecasts made regarding customer demand for a product. [13] [14] Understanding and predicting customer demand is vital to manufacturers and distributors to avoid stock-outs and to maintain adequate inventory levels. While forecasts are never perfect, they are ...
This little-known but serious issue can be overcome by using an accuracy measure based on the logarithm of the accuracy ratio (the ratio of the predicted to actual value), given by (). This approach leads to superior statistical properties and also leads to predictions which can be interpreted in terms of the geometric mean.
(200% for the first formula and 100% for the second formula). Provided the data are strictly positive, a better measure of relative accuracy can be obtained based on the log of the accuracy ratio: log( F t / A t ) This measure is easier to analyse statistically, and has valuable symmetry and unbiasedness properties.
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Mean directional accuracy. Mean directional accuracy ( MDA ), also known as mean direction accuracy, is a measure of prediction accuracy of a forecasting method in statistics. It compares the forecast direction (upward or downward) to the actual realized direction. It is defined by the following formula:
Used together with forecast accuracy and forecast bias to have a complete view of the impact of forecasting errors on operations. Forecast Attainment is used to judge the overall achievement of the demand or supply plan and identify top level bias of the plan
Economic forecasting is the process of making predictions about the economy. Forecasts can be carried out at a high level of aggregation—for example for GDP, inflation, unemployment or the fiscal deficit —or at a more disaggregated level, for specific sectors of the economy or even specific firms. Economic forecasting is a measure to find ...
where is the actual value of the quantity being forecast, is the forecast, and is the number of different times for which the variable is forecast. Because actual rather than absolute values of the forecast errors are used in the formula, positive and negative forecast errors can offset each other; as a result, the formula can be used as a ...