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comparing forecast vs actual

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  • #48437

    bmack
    Participant

    What is the best way to statistically analyze forecasted vs actual sales data to determine the accuracy of the forecast tool? I have a about 5 data points (one per quarter) for 3 different product families. Also since the same forecasting tool is being used on all 3 product families am I able to combine the data sets to have a larger sample size? Any help would be appreciated.

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    #163309

    Erik L
    Participant

    bmack,
     
    There are three standard measures that can be used to assess the accuracy of your forecasting predictive model against a time series of actual data.  MAPE, MAD, and MSD are the standards that are typically used. 
     
    MAPE (Mean Absolute % Error) is calculated as:                                                                                                                                                                   (‡” |((Actual-Predicted)/Actual)|/n)*100
     
    MAD (Mean Absolute Deviation) is calculated as:
    (‡”|((Actual-Predicted)/Actual)|)/n
     
    MSD (Mean Squared Deviation) is calculated as:
    (‡”|(Actual-Predicted)|^2)/n
     
    MAPE will provide accuracy of the forecasting model on a % basis.  MAD will provide the accuracy on a unit basis, and of the measures, MSD, is most affected by large deltas between the model and the actual data.  Were you looking for something else?  Based off of your other question, regarding the efficiency parameter, Ifm assuming you have already been exposed to these more basic measures.
     
    Regards,
    Erik

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    #164074

    Mikel
    Member

    Might you not prepare a Shewhart chart of the observed differences between actual and forecast to assess the differences?

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