Key Point: Coefficient of Variation is not a perfect measure of forecastability. However, if used properly, it can add value to a business’s forecasting process. In the world of forecasting, one of the key questions to consider is the forecastability of a particular set of data. For example, a salesman might consistently be better at
In the simplest inventory situation, the only variability is in the quantity of demand for a single day. There is no trend up or down or seasonal effect. The demand today is independent of the demand for tomorrow. Additionally, we will assume replenishment time is zero. That is when we place an order for additional
You have a favorite forecast accuracy metric(s) you’ve been practicing within the organization for a while, and now you think you are ready to bring it to the Sales and Operations Planning (S&OP) meeting as a Key Performance Indicator (KPI) of your demand planning process. But you are not sure exactly how to go about
In our line of work at Arkieva, when we ask this question of business folks: What is your forecast accuracy? Depending on who we ask in the same business, we can get a full range of answers from 50% (or lower) to 95% (or higher). How is this possible? Imagine a management team being given
Key Points on MAPE: Mean Absolute Percent Error (MAPE) is a useful measure of forecast accuracy and should be used appropriately. Because of its limitations, one should use it in conjunction with other metrics. While a point value of the metric is good, the focus should be on the trend line to ensure that the
Research shows that a majority of mergers fail. A recent study put the percentage as high as 83%. As one would imagine, there are various reasons for this high rate of failure. However, the reasons can be divided into two main groups:
My first memory of inventory is from a conversation I had with my Dad when I was probably 10 years old. I remember him telling me to go to a particular store because the owner kept a lot of inventory on hand. He equated that to the owner being a wealthy man, who obviously knew