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"CAFE" A NEW FORM OF EVALUATION OF THE METHODS OF

FORECASTING A DEMAND

Forecasting method, currently, we can understand it as a tool that allows

us to make an estimate about the probability of future events. Although there are

different methods for making a forecast, you should always follow a logical

process that consists of the following steps; such as formulating the problem and

collecting data, manipulating and cleaning data, building and evaluating the

model, applying the model and finally evaluating the forecast. Through planning,

it is intended to consciously alter future events, while we use forecasts to predict

them, but not everything is good, forecasts tend to carry an error, but the

achievement of the smallest possible error is the goal consistent with the

reasonable costs of preparing forecasts. It is natural that forecasts are always

incorrect and in results, production planning based on demand forecasting may

not be optimal with actual demands.

The importance of this trial insists on the preponderance that exists in the

presentation of a new prognosis certificate that has evaluated its performance,

and has had good results, "CAFE" Cumulative absolute prognosis error.

Therefore, in the course of this essay we will be dealing with different authors and

points of view.

Basically, "CAFE" is designed to consider not only forecast errors, but also

the costs caused by errors in the planning of aggregate production that is

configured on the basis of forecasts. The "CAFE" is a sum of the product of the

cumulative forecast error and the weighting factors for backorder and inventory

costs. In addition, it has gained weight by making clear its effectiveness of the
proposed measure by conducting intensive experiments with competing demand

data sets. It therefore addresses a broader view of production planning. In

general, production planning performance is determined by the total cost that

occurs when actual demands are met. It is therefore more reasonable for a new

measure for forecasting methods to be designed to consider actual cost.

The article affirms the new measure, the Cumulative Absolute Forecast

Error "CAFE," which is defined as the cumulative sum of absolute values of

forecast errors. The "CAFE" can be represented as the cumulative sum of CFE

and calculated using the equation.

Where 𝐷𝑖 represents the actual demand and 𝐹𝑖 represents the forecast.

In short, we see the benefits of this method in how it decreases uncertainty

about the future, plus it plays a very important role in the planning process of an

organization. "CAFE" can respond without problem to the forecasts required by

the organizations since it not only measures differences between real demands

and forecasts, discreetly adds considerations of errors, always seeking to

decrease costs and increase profits.

By: Diego Carrillo Hernández And Mercedes Osorio

Engineering Faculty

Industrial Engineering (Production)