ma18 - Monitoring and Controlling Forecasts No forecast is...

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Monitoring and Controlling Forecasts No forecast is complete accurate 100 percent of the time. There will always be randomness that causes actual demand to be above or below the forecast. As an operations manager, however, we want to make sure our forecasting is doing a reasonably good job. To do so, we use a tracking signal. The tracking signal measure how good the forecast is at predicting actual values. It is defined as the ratio of the cumulative error— simply the sum of the forecast errors to date—to the mean absolute deviation (MAD). Conceptually, you can think of the tracking signal as telling you how many mean absolute deviations your forecast has been away from the actual value. If the tracking signal is close to zero, your forecasting has been very good at keeping up with actual demand. If the forecasts are continually high or low, however, the tracking signal will be very high or low and the forecast probably has some sort of bias error. Managers generally want to keep the tracking signal within an
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ma18 - Monitoring and Controlling Forecasts No forecast is...

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