Answers to Your Forecasting Questions

The Journal of Business Forecasting, Winter 2006 | Go to article overview

Answers to Your Forecasting Questions


Q. I am a Demand Planner, and our Demand Planning Group is about six months old and we are still working out some of the bugs in our systems and processes. We are calculating a MAPE value for each of our SKU, but we are having a difficulty getting a representative MAPE value forparts that have amonthly actual demand of zero. Since the formula requires the actual value to be in the denominator, we are unable to get a value because of the division by zero. By default, we have been using a value of 0.1, but that also has its limitations for giving accurate error values. Do you know of a better way to calculate these types of issues, or do we need to go to a different calculation to determine our monthly forecast error?

Rich Mayer

Paccar Parts

A. I understand your predicament. Under the circumstances, the best you can do is to compute MAPE of that SKU over a three or six month period instead of one month. Looks like that SKU is either not important or have an intermittent demand. Using 0.1 as a denominator won't help as it will distort its MAPE.

Q. I felt compelled to respond to your answer in the Fall issue of Journal of Business Forecasting on the effect of supply issues on forecast accuracy. People in sales and marketing are key components in creating an accurate collaborative demand forecast. If you start including factors in forecast accuracy that are outside of their realm of control, they will start to place less focus on forecast accuracy. This can have a negative effect on their future effort in both resolving forecast issues and in creating future forecasts. The psychological factors present in collaborative forecasting are often ignored in traditional operations management, but they are very important.

Furthermore, you pointed out that lack of supply is an issue that needs to be addressed by the organization and while I agree with that point, but it is outside the realm of forecasting. There are many other measures that a company can and should use to capture supply issues. It is definitely reasonable to expect the individual measuring the forecast accuracy to bring up specific issues with the people in the supply chain that are involved, but I would bet ten times out of ten that the sales representative that missed out on the sales would beat them to the punch.

Josh Kanownik

The Little Tikes Company

A. You brought up a very interesting point. I am one hundred percent with you that Sales/ Marketing people are the key people when it comes to preparing demand forecasts. In demand forecasting, supply people have no role to play, but demand forecasts can highlight the issue if there is any with the supply. If the supply cannot meet the demand, it will tell you that. I don't think I mentioned anything other that. Here we are talking about demand forecasts or unconstrained demand. But forecasts we use for production and financial planning can be affected by the supply.

Let me give you one example. I was sitting in one of the consensus meeting where I presented statistical forecasts. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Answers to Your Forecasting Questions
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.