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… the forecast error.
After going over them, we will question if these methods are effective.

Video Introduction: How Can Forecast Error be Calculated?
https://youtu.be/-sA4f-sMnsc
Text Introduction (Skip if You Watched the Video)
The question of how can forecast error be calculated is a common question in forecasting. We go through all of the major and even some of the minor methods of forecast error measurement. The calculation of these methods is widely known but not as well understood as generally thought. This article is written from the vantage point of working on forecasting projects for over …

… number of difficult to forecast products through marketing efforts.
Issue #2: Forecasting Competence
Most companies tend to put minimal resources into forecasting, particularly when considering how important forecasting is to the company’s performance. Even the largest companies have relatively small demand planning departments. It is common for those in leadership positions that touch forecasting to not care about the topic. Several influential groups in companies are more often than not hostile to forecast error measurement.
Therefore, even if forecasting benchmarks were available (which they are not), forecasting in a way that matches or exceeds the average forecast accuracy …

… most important, and least discussed areas of forecast accuracy or forecast error measurement.
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Why Understand The Definition of Forecast Accuracy?
It is crucial to comprehend forecasting error as it provides the necessary feedback to improve forecast accuracy eventually.
Forecast error is deceptively easy to understand. The vast majority of people who work with forecast errors can often be caught off guard about the forecast error they rely upon.
The following realities apply to forecast error …

Executive Summary

The forecast accuracy is measured by a number of universally accepted measurement methods.
After going over them, we will question if these methods are effective.

Video Introduction: How is Forecast Accuracy Measured?
https://youtu.be/iqftmX7iTqE
Text Introduction (Skip if You Watched the Video)
How forecast accuracy is measured is one of the most common questions in the field of forecasting. Forecast accuracy calculation is normally performed by applying one of the standard forecast error calculation methods. The calculation of these methods is widely known but not as well understood as generally thought. Forecast error is deceptively easy …

… consider this one of the significant myths of forecasting. For a forecast error measurement to be understood, it must be documented in full. Not only must the forecast error method be explained, but all the related factors, ranging from the forecast planning bucket to the level of aggregation reported, must be understood.
All of this is to get a person to just a basic understanding of the forecast error.
For All of the Myths, See the Following Table
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Forecasting Error Myths
Select the link below to be taken to the appropriate forecast error myth.

Myth Number Forecasting

… between different forecasting methods overly complicated.
They lack the context of the volume of the demand history or the price of the forecasted product, meaning that the forecast errors must be provided with context through another formula.
They are difficult to explain, making them less intuitive than a different approach.

How MAE is calculated is good, but it is not the forecast error we recommend.
Why Do the Standard Forecast Error Calculations Make Forecast Improvement So Complicated and Difficult?
It is important to understand forecasting error, but the problem is that the standard forecast error calculation methods do not …

… a forecast error measurement calculation that is not that frequently used in companies. MASE has the disadvantage of non being proportional, which makes the error difficult to explain and undermines the faith that the error measurement is reliable. In fact, in most cases, when you use the term MASE in forecasting departments, most of the audience it will often be the first time they have heard of this method. You will learn about MASE’s calculation and the common problems that are found in MASE and other forecast error measurement calculations.
See our references for this article and related articles …

… issues that hold back forecast improvement and how forecast error can be reduced. These are some of the top issues that we have seen on most, if not nearly all, of our forecasting clients.
Issue #1: Lack of Forecasting Bandwidth
Demand planning departments are typically understaffed versus the number of forecasting items and forecasting work that is available. One might have a company with billions in revenue. Not more than ten people involved in forecasting units (financial forecasting, marketing forecasting, and sales forecasting have their people partially involved in forecasting). Typically forecasting departments are staffed with a combination of a …