Croston Method in APO

[Former Member]

Hi Experts,

Can anyone give some hit how croston method calculates?

Need some formula and examples in APO.

Thanks,

[Former Member]

Sumanth,

For sake of knowledge, the maths behind croston method is based on "probability" distribution. i.e. the likehood of a demand arising after some periods and not a time series forecast.

You would need to debug the code when you run a forecast with croston method to know how exactly it works. You can discover it after 3 months of research.

Do publish your findings 🙂

I hope this doesnt help much but just a nice to know

Thanks

BORAT

[Former Member]

Hi,

The formula is actually in the online help (see http://help.sap.com/saphelp_scm50/helpdata/en/ac/216b89337b11d398290000e8a49608/content.htm) and is straightforward: you do a separate calculation of:

1) average sale Q (excluding zeros, this is important)

2) average length L of consecutive zeros

You compute both quantities with exponential smoothing, so you specify an alpha value, say .3

Forecast is Q/(L+1) or one bunch of Q and then L zeros. The result is usually "better" than applying a constant model, compare by yourself.

Thanks,

J.