Measuring Forecast Error in Time Series Forecasting using MSE, MAD, and MAPE techniques

This lecture recording provides an overview of Measuring Forecasting Error. The Forecast Error is the difference between the observed value of the times series and the forecast. We will review three types of Forecast Errors, including Mean Absolute Deviation Error (MAD), Mean Square Error (MSE) and Mean Absolute Percentage Error (MAPE). Content derived from from the Textbook "Operations Management, Sustainability and Supply Chain" 13th edition by Jay Heizer, Barry Render and Chuck Munson. Chapter 4 on Forecasting.

[@monikapalaniappan5255]

Thanks for uploading. Helped in detail about MAPE

[@OperationsAndSupplyChain]

Hi Monika, you are welcome! If you are interested, you can find some practice problems about MAPE on our website at www.OperationsUniversity.Org. Thanks for watching our videos!

[@PrabashniReddy]

Really good, I understand this.

[@OperationsAndSupplyChain]

Hi Prabashni, I'm glad the video helped you to understand forecast accuracy. It can be a complicated subject! Thanks for watching!

[@ClashThenDash]

Maybe I wasn’t paying attention well enough idk, but how can you determine what Alpha should actually be. How do you know that calculated errors are correct and not just guessing. I’d be running numbers all day and not understand what answer is truly what im looking for.

[@OperationsAndSupplyChain]

You get to pick the Alpha. A smoothing constant is valued from 0 to 1. When the Alpha is close to Zero, the smoothing happens more slowly/gradually. When the Alpha is close to 1, it will be more volatile and responsive to change. There is some trial and error (educated guessing) involved in picking the best Alpha for your forecast. Some companies & products are going to have minimal forecast variation while others will have a lot.

[@ClashThenDash]

@@OperationsAndSupplyChain I really like ur help and support. :) I still got a lot more of ur videos to watch and I also bought the text book ur work off of. I’m farther along in ur videos than the text book. But that’s fine by me. Reading over something twice can help me think more about what I’m reading.

[@kevinjonathan5282]

i like the method in excel to help reduce time, hope this will be helpful kzbin.info/www/bejne/eWatkISJh5yGipI