Estimation of Demand Variability Parameters.
AMC INVENTORY RESEARCH OFFICE PHILADELPHIA PA
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Demand variability is measured by percent forecast errors e.g., if the forecast is 100 and actual is 75, percent forecast error is 25. Analysis of more than 13,000 items shows that percent forecast error correlates highly with item activity. Items with larger numbers of demands per year tend to have lower percent forecast errors. An estimating relation to get expected forecast error based on item activity is developed. Author
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