Professional Documents
Culture Documents
DP Modeling
DP Modeling
DP Modeling
11/17/2003
Background
What it is: A detailed presentation focusing on the Mathematical methods of prediction that are standard in APO-Demand Planning. It is based on the Functionality found in release 3.1.
History
3 4
3 4
3 4
Actual Value
Past Horizon
Basic Value
Data Values
2000
2 1
1000
Forecast Horizon
Trend Value
2
Data Values .75
-.75
1
Forecast Horizon
Seasonal Index
Data Values
2.50
1.00 .25
Forecast Horizon
Length of Season
Initialization
Basic value, Trend value, Seasonal indices, and the Mean Absolute Deviation are initialized.
Ex-post Forecast
An Ex post Forecast is a forecast run in the past for comparison against historical values. The exex-post forecast is used to measure model fit.
Ex-post Forecast
Forecast
History Values
Forecast Values
History
- Initialization length is dependent on the forecast model - Ex-post forecast length is the history horizon less the initialization horizon
Future
Ex-post Forecast
The following Models do not generate an ExEx-post forecast:
13 14 60 70
Moving average Weighted moving average Historical data adopted Manual forecast
General Calculation
Basic(t), trend(t), seasonal(t) = Function(actual(t), basic(t-1), trend(t-1), seasonal(t-1s))
2 95
6 110
7 110
Trend Initialization
Basic Value Initialization Ex-Post Forecast Ex(t +i) = G(t) + i * T(t) Where i = 1
Basic Value
G(t) = V(t) + (1- ) [ G(t-1) + T(t-1) ] 113 = .3 (115) + (.7) [ 102 + 10.0 ]
Trend Value
Ex-Post Forecast
134
Ex-Post Forecast
Forecast
Ex-Post Forecast
Forecast
Model parameters
The model parameters, Alpha, Beta, and Gamma, control the weighting of each historical values.
Alpha is used in the basic value calculation Beta is used in trend value calculation Gamma is used in the Seasonal index calculation The value for the parameters range from 0 to 1. A higher value will place more emphasis on recent history. The parameters also control how reactive the forecast is to changes in historical patterns.
3 4 5
Constant Models
3 models within the constant model group: Constant Model (10) 1st Order Exponential Smoothing (11) Same Formula ! 10 = 11
Constant Model with automatic Alpha adaptation (12) Constant Models follow the pattern:
Basic value and exex-post forecast are equal Higher alpha puts more weight on recent values Higher alpha makes the forecast more reactive to recent changes in history
SAP AG 2002, Title of Presentation, Speaker Name / 24
Moving Average-Formulas
Moving Average-13
Trend Models
There are four models for data with trend: Forecast with Trend Model (20) Holt Holts Method (21) Same Formula ! 20 = 21
Second Order Exponential Smoothing (22) Trend model with Automatic Alpha Adaptation (2nd order) (23)
Seasonal Models
Seasonal Models are used to depict a Seasonal forecast or a recurring recurring pattern, without any upwards or downwards slope. The pattern occurs occurs across its season or a number of Seasonal Periods (Usually recommended to be 12 Months). The trend value and Beta in this case are zero, signifying no upward or downward slope.
Seasonal Models
There are three Models associated with the seasonal patterns. Forecast with the Seasonal Model (30) Seasonal Trend based on the Winter Winters Method (31) Season + Linear Regression (35) Same Formula ! 30 = 31
If both are determined to be significant, a Seasonal Trend Model is used. If neither tests is determined to be Significant, then the Constant Constant Model is chosen as a default
SAP AG 2002, Title of Presentation, Speaker Name / 42
Yes No
No Forecast (98)
No forecast is conducted
3 4
The Mean Absolute Deviation is the error calculation used to determine the best fit in the Auto Model 2 Forecasting Model.
SAP AG 2002, Title of Presentation, Speaker Name / 58
Thank You