A Practical Guide To MLR Forecasting in APO Demand Planning

26.07.
2018 Forecast error calculations in APO DP | SAP Blogs
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Forecast error calculations in APO DP

April 2, 2013 | 2,743 Views |
Radhakrishnan G K
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SAP Supply Chain Management
SAP Advanced Planning and Optimization | apo | book | calculations | data | debug | error | forecast
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These documents describe the Forecast error calculations in APO DP and

internal calculations for the same.
Applies to: Industries which have implemented “SAP SCM-Demand

planning” (Release version from 4.1…).
Authors: G.K.Radhakrishnan & Pravin Ramchandran
https://blogs.sap.com/2013/04/02/forecast-error-calculations-in-apo-dp/ 1/15
26.07.2018 Forecast error calculations in APO DP | SAP Blogs
Author Bio
G.K.Radhakrishnan (APICS-CPIM ), is working as a SAP APO-DP

consultant in Accenture has a consulting experience of more than three
years with a domain experience of 7years in supply chain.
Pravin Ramchandran is working as a SAP APO-DP consultant in Accenture has a

consulting experience of more than five years with a domain experience of 7years in
supply chain.
Please have a look at the SAP help link below which covers the formulas for
forecast errors.
http://help.sap.com/saphelp_46c/helpdata/en/a5/6320e843a211d18941000
0e829fbbd/frameset.htm
Introducton to error definitions:
MAD: The mean absolute deviation gives the mean average difference
between the forecasted value and the historical value in the ex-post
forecast.
MPE: Is the mean percentage error between the forecasted value and the
historical value in the ex-post forecast.
MAPE: Is the mean absolute percentage error between the forecasted

value and the historical value in the ex-post forecast
MSE: Is the mean square error between the forecasted value and the
RMSE: Is the root mean square error between the forecasted value and the
Selecting forecast errors
MAD is used for low volume / sporadic demand pattern, whereas MAPE is
for high volume / fairly consistent and regular demand pattern.
MAPE is a relative measure .So if a volume of a product is very low then

minor errors in the will also show huge % error. This may mislead the user.
MPE numbers may mislead planners as it considers the sign (+/- ). So the
error gets net off due to positive and negative numbers getting added up
resulting a smaller number.
Mean Square Error -MSE is a highly sensitive number ( as shown in the

excel calculations ) due to the squaring effect.Even the small increase in the
error will lead to a high increase in MSE.This can be used for Premium
products as inventory and stock out cost may be very high( A class items in
ABC classification ).
Sample calculations
The below screen was taken on Oct 2012 .So we have history till Oct 2012
and Statistical forecast is calculated from Nov 2012
The Horizons for the same are show below
As Seasonal model was used so we have a initialization of 12 months.
Corrosponding calculations are:
Error Total=sum of (Difference of Actual and Ex-Post)

= 539 (Minor differences is due to rounding which are explained
later )
MPE= sum of (% Difference of Actual and Ex-Post vs actuals )/N+1

=(-24.90)/13
=-1.91554817731288
The function model takes N+1 as is shown in the debug screen later
MAPE=Sum of (Absolute value ((% Difference of Actual and Ex-Post vs

actuals )/N+1
=124.902126305067/ 13
=9.60785587
MSE=Square of “Difference of Actual and Ex-Post”/N+1

=1093163/13
=84089.4615384615 (Minor differences is due to rounding which are
explained later )
RMSE=SQRT(MSE)
=SQRT(84089.4615384615)
=289.981829669484 (Minor differences is due to rounding which are
explained later )
Internal calculations of the Function module
Below steps are needed to understand the internal calculations of forecast

errors.
1.Load the selection in planning book
2. Go to SE37 and put a break point in function module

/SAPAPO/FCST_CALCULATE_ERRORS
3. Type /h in the command window
4.Click on the generate univariate forecast
5.This will take you to the debugging screen
Function module /SAPAPO/FCST_CALCULATE_ERRORS is used to calculate the

errors except MAD.
The functional module is taking N+1 as number of periods .In this example we
have ex-post forecast for 12 periods but all the error calculations are based on
13 periods
The internal calculated values are shown below
Internal calculations from I_FCSTVIEW
As shown in the above screen, the numbers are not rounded for greater
accuracy but the expost forecast seen in the planning book are rounded.
Relevent notes to correct the forecast error calculations are
SAP Note 1616763 – Incorrect forecast error calculation
SAP Note 1746920 – MAPE error calculation incorrect
Alert Moderator
16 Comments
You must be Logged on to comment or reply to a post.
Former Member
April 3, 2013 at 7:42 am
Hi,
just to clarify for myself… this division by (n+1), is it ok? Or is it a bug that is
corrected by the OSS notes you quote at the end of your text? I am missing whether
you are documenting the bug or showing how the calculation works.
regards,
J.
Radhakrishnan G K Post author
April 11, 2013 at 3:06 pm
Hi James , Sorry for the delay in reply.
If we compare standard formulas available in statistics text books then it

is N ,but APO takes N+1.
The notes 1616763, 1746920 are other bug fixes in the calculations of
the error.
The basic objective of the document was to help other DP consultants

on how these are calculated ( especially data rounding part ) and how to
debug the planning book.
As we have too many settings in the univariate forecast tab and types of
forecast models ,settings and parameters so the results can vary and
may need further debugging of the code.
Hope this helps
RK
Former Member
April 11, 2013 at 3:14 pm
May be you should rise an OSS note about this. From a

statistics point of view, one sometimes argues whether one
should use 1/N o 1/(N-1), but I agree that 1/(N+1) is most
probably wrong.
Even model ranking will go wrong most of the time as

different models have different ex-post horizons…
Thanks for sharing,
J.
Former Member
April 13, 2013 at 10:48 am
N-1 denominator is used in sample statistics

A hard to explain concept, this comes
from estimation theory that a sample statistic
like mean or standard deviation when divided
by N-1 (and passing the test hypothesis)
results in chosen test being a better estimate
of the population statistic.
N+1 may have similar connotations in

Deutsch
GK / Pravin: Thanks for this nice document.
I was trying to evaluate a method to calculate

“Post facto” forecast error rather than an Ex-
post error. What is the best way to do it ?. I
did it using macros in data view but this is kind
of inefficient and slow and also not a
consistent approach.
I wanted to measure the forecast of period P

created in period P-n with actual sales of P
and this time difference has to be variable
based on material lead times (from material
master). This means for some materials that I
am forecasting (directly or through
disaggregation from e.g. a material attribute
forecast),
e.g. I would like to measure the “final” demand

plan (that is being released to SNP) created in
period P-5 against sales in period P but for
some material I would like to measure the
error against forecast created at start of P-1
against sales in P. This means I want to
respect lead times of the materials when
considering the “firm” horizon of a forecast
key figure (any one key figure that represent
final demand plan….however it is derived /
using a model or without using a model).
This is for management reporting and

measuring the sales and demand planners
efficiency and wisdom and not the model’s
accuracy per se.
Appreciate a tip or two.
April 13, 2013 at 2:00 pm
Hi Borat
One possible solution for your

issue can be as follows:
1.Extract Forecast every week

from APO-DP-PA to BW and
store it in the infocube
2.Add a “release week” or

“extracted in week” and a “lag
number = calweek- release week
” in the data flow so that we
know when it was extracted and
the lag number
3.Create a Multiprovider and add

the forecast cube and sales cube
4.Create a bex report on this

Multiprovier
5.The bex report should have

two inputs :
a) Release week or lag number
b) Calender week
So that it will filter forecast data

based on lead time ( lag number
) / or simply based on release
week and pull sales from sales
cube and few calculated KF for
the errors.
Former Member
April 13, 2013 at 2:47 pm
Thanks GK, James,
Actually proposed the same

verbatim to the client this
morning though I wasn’t
myself sure in entirely esp.
because of the variable lead time
thing. the lag thing though
approximate is a good idea. I will
add a third dimension of lead
time from material master too.
Let me see how this shapes up. I
will post my outcome here.
Much appreciate this re-

assurance.
Thanks once again
Borat
April 14, 2013 at 2:46 am
Hi Borat
One option for variable lead time

can be to use Infoset.This is
another BW virtual provider just
like the Multiprovider
Assumptions for the below

solution are : Forecast is
extracted on a weekly basis to
BW and Lead time is also
converted in Weeks and stored
in a info object
Steps:
1.Create a info object which has

product number and lead time in
weeks.This needs to converted
by abap code in the data
modeling.
2.Create a info set on the

forecast cube of BW (earlier
steps ) and the info object of
step1.Link the lead time with the
lag number in the infoset
Now the infoset will filter data for

only those entries which has
lag=leadtime
3.Create a Multiprovider on this

infoset +sales cube
4.Create a bex report which has

only cal week as input as infoset
will filter all the extra data
Know Issues: If data volume is

very huge then infoset based
report may cause performance
issues (long query execution )
Former Member
April 14, 2013 at 6:35 pm
Fantastic. Let me plagiarize this

and sell this for 5000 dollars
Will part when we meet. This will
definitely work. I can visualize.
Former Member
April 13, 2013 at 2:10 pm
Check the new functionality of

DP Customer Forecast Analysis
(EHP1 or 2, I don’t remember), I
think it is more or less the idea
behind the “Waterfall analysis”
(not sure, however, description is
a bit obscure).
Expert Radhgk shows the usual

approach to do this, BW is the
best choice as with macros etc…
you would need to store your
whole forecast at least as many
times as periods in your lead
time, requiring too much space in
liveCache.
regards,
J.
Former Member
April 13, 2013 at 2:11 pm
As someone once said, when the

difference between 1/N and 1/(N-
1) matters, then you are no
longer truly doing statistics (too
few data points)…
Ada Lv
July 12, 2013 at 8:57 am
A nice blog post~
Former Member
July 19, 2013 at 10:00 pm
I have a situation where I am running Automatic Model Selection and Parameters

Tab is set with MAD for Error Measure and in the Message Tab, the system identifies
that Season is positive and Trend is negative. But still system selects the constant
Model. Why does this occur? Has anyone observed this behavior?
If I change the Error Measure to be MAPE then the Automatic Selection selects the
Seasonal Model. The MAPE error is smaller than the MAD error.
Former Member
July 22, 2013 at 8:54 pm
I haven’t tested it. but here is the science as I understand it
MAD and MAPE are completely different measures.
I am pasting a statement from a doc written by a learned man outside of

SAP world.
Here is what he says comparing RMSE to MAPE. So you can intuitively

base this on MAD and MAPE
In general, the standard devia on of the

noise terms grows as the square root of the
number of periods being aggregated.
Forecast RMSE grows as the square root of

the number of periods being aggregated, and
the MAPE falls as the inverse of the square
root of the number of periods being
aggregated.
As a rough rule of thumb, for example, if we

compared weekly forecasts to monthly
forecasts, we would expect the monthly
results to have twice the RMSE and half the

MAPE
Former Member
August 13, 2013 at 6:09 pm
Thanks a lot for such valuable information G.K.Radhakrishnan & Pravin

Ramchandran. Keep it up
Thank you
Satish Waghmare
Christopher Smith
July 7, 2015 at 7:12 pm
Great article guys, I keep referring to this time and again… thanks for the gift that
keeps giving.
Christopher Smith
July 9, 2015 at 8:32 pm
Great blog post!
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26.07.

2018 Forecast error calculations in APO DP | SAP Blogs

Forecast error calculations in APO DP

SAP Supply Chain Management

share share tweet share

These documents describe the Forecast error calculations in APO DP and

Applies to: Industries which have implemented “SAP SCM-Demand

Authors: G.K.Radhakrishnan & Pravin Ramchandran

G.K.Radhakrishnan (APICS-CPIM ), is working as a SAP APO-DP

Pravin Ramchandran is working as a SAP APO-DP consultant in Accenture has a

Introducton to error definitions:

MAPE: Is the mean absolute percentage error between the forecasted

Selecting forecast errors

MAPE is a relative measure .So if a volume of a product is very low then

Mean Square Error -MSE is a highly sensitive number ( as shown in the

The Horizons for the same are show below

As Seasonal model was used so we have a initialization of 12 months.

Corrosponding calculations are:

Error Total=sum of (Difference of Actual and Ex-Post)

MPE= sum of (% Difference of Actual and Ex-Post vs actuals )/N+1

MAPE=Sum of (Absolute value ((% Difference of Actual and Ex-Post vs

MSE=Square of “Difference of Actual and Ex-Post”/N+1

Internal calculations of the Function module

Below steps are needed to understand the internal calculations of forecast

1.Load the selection in planning book

2. Go to SE37 and put a break point in function module

3. Type /h in the command window

4.Click on the generate univariate forecast

5.This will take you to the debugging screen

Function module /SAPAPO/FCST_CALCULATE_ERRORS is used to calculate the

The internal calculated values are shown below

Internal calculations from I_FCSTVIEW

Relevent notes to correct the forecast error calculations are

SAP Note 1616763 – Incorrect forecast error calculation

SAP Note 1746920 – MAPE error calculation incorrect

April 3, 2013 at 7:42 am

Radhakrishnan G K Post author

April 11, 2013 at 3:06 pm

Hi James , Sorry for the delay in reply.

If we compare standard formulas available in statistics text books then it

The basic objective of the document was to help other DP consultants

Hope this helps

April 11, 2013 at 3:14 pm

May be you should rise an OSS note about this. From a

Even model ranking will go wrong most of the time as

Thanks for sharing,

April 13, 2013 at 10:48 am

N-1 denominator is used in sample statistics

N+1 may have similar connotations in

GK / Pravin: Thanks for this nice document.

I was trying to evaluate a method to calculate

I wanted to measure the forecast of period P

e.g. I would like to measure the “final” demand

This is for management reporting and

Appreciate a tip or two.

Radhakrishnan G K Post author

April 13, 2013 at 2:00 pm

One possible solution for your

1.Extract Forecast every week

2.Add a “release week” or

3.Create a Multiprovider and add

4.Create a bex report on this

5.The bex report should have