Lesson 5 mape.

xls

Actual Forecast Forecast Absolute Absolute %

Month Demand Demand Error Error Error
JAN 90 100 -10 10 11.1%
FEB 85 100 -15 15 17.6%
MAR 100 90 10 10 10.0%
APR 105 100 5 5 4.8%
MAY 110 100 10 10 9.1%
JUN 95 105 -10 10 10.5%
JUL 125 110 15 15 12.0%
AUG 105 110 -5 5 4.8%
SEP 125 140 -15 15 12.0%
OCT 100 110 -10 10 10.0%
NOV 120 110 10 10 8.3%
DEC 115 120 -5 5 4.3%

Sum -20 120 114.6%

Std Dev : 10.9 10.0 9.55%
MAD MAPE

-2.0
TS
Formula:
Forecast Error = Actual Demand - Forecast Demand

APE ( Absolute Percentage Error) = Absolute Error / Actual Demand

MAD = Sum of Absolute Errors/ Number of Observations

MAPE = Mean of Absolute Percent Error

TS = (Sum of FE) / MAD

Note: We calculate TS to find whether the Forecast is biased or unbiased. If TS is > - 4 and < + 4, then the
forecast is unbaised.
160

140

120

100

Actual Demand
80
Forecast Demand

60

40

20

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
 Actual Forecast Forecast Absolute Absolute %
Month Demand Demand Error Error Error
JAN 90 100 -10 10 11.1%
FEB 85 100 -15 15 17.6%
MAR 100 105 -5 5 5.0%
APR 105 120 -15 15 14.3%
MAY 110 115 -5 5 4.5%
JUN 95 105 -10 10 10.5%
JUL 125 140 -15 15 12.0%
AUG 105 110 -5 5 4.8%
SEP 125 140 -15 15 12.0%
OCT 100 110 -10 10 10.0%
NOV 120 130 -10 10 8.3%
DEC 115 120 -5 5 4.3%

Sum -120 120 114.6%

Mean 10.0 9.55%
MAD MAPE
-12.0
TS
This is a biased process because TS is <- 4

Formula:
Forecast Error = Actual Demand - Forecast Demand

APE ( Absolute Percentage Error) = Absolute Error / Actual Demand

MAD = Sum of Absolute Errors/ Number of Observations

MAPE = MAD/Mean of Actual Demand expressed as a Percent

TS = (Sum of FE)/MAD

Note: We calculate TS to find whether the Forecast is biased or unbiased. If TS is > - 4 and < + 4, then the
forecast is unbaised.
160

140

120

100

Actual Demand
80
Forecast Demand

60

40

20

0
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Exercise:
Calculate the MAPE and Tracking Signal for the following forecast data.
Is the process biased?

Forecast
Month Actual Demand
Demand
JAN 125 100

FEB 85 100

MAR 100 90

APR 70 100

MAY 132 100

JUN 95 105

JUL 125 110

AUG 90 110

SEP 144 140

OCT 100 110

NOV 136 110

DEC 115 120

Solution:
Actual Forecast
Month Forecast Error Absolute Error Absolute % Error
Demand Demand
JAN 125 100 25 25 20.0%

FEB 85 100 -15 15 17.6%

MAR 100 90 10 10 10.0%

APR 70 100 -30 30 42.9%

MAY 132 100 32 32 24.2%

JUN 95 105 -10 10 10.5%

JUL 125 110 15 15 12.0%

AUG 90 110 -20 20 22.2%

SEP 144 140 4 4 2.8%

OCT 100 110 -10 10 10.0%

NOV 136 110 26 26 19.1%

DEC 115 120 -5 5 4.3%

Sum 22 202 195.7%

Mean 16.8 16.31%

MAD MAPE

1.3

TS

Process for this item is not biased because TS is > -4 and < +4
Demand Forecast Ab Er

100 120 20

105 120 15

135 120 15

150 120 30

MAD 20.00