Forecast Initialization SCM

[Former Member]

Dear Sirs,

In order to understood the best forecast parameters to be use on my data type, i'm studying analytic formula behind the SAP forecast process.

i have found in this forum this link:

https://www.sdn.sap.com/irj/servlet/prt/portal/prtroot/docs/library/uuid/7a4025f8-0a01-0010-0fb2-b7a...

It is very useful to understand haw SAP work.

The only think that i have not understood is initialization process.

In particular:

I'm using a Trend model whit first order exponential smoothing:

We start with two parameters that are initialized:

Basic Value and Trend Value

Basic Value is initialized as the average of value in initialization period + Trend

Trend value is initialized as follow in case of 3 value:

Hist (3) - Hist (1)

-

---

2

The question is how is initialize the Trend value if Historical period is > 3?

What happen at the initialization basic value and initialization trend value with 12 value as initialization?

Thank you very much for your help!

BR

Andrea

[Former Member · Accepted solution]

The equation is

Initialization: T(3) = (H(3) - H(1)) / 2

B(3) = T(3) + (H(1) + H(2) + H(3)) / 3

Modelling: B(t) = (1 - α) * (B(t-1) + T(t-1)) + α * H(t)

T(t) = (1 - β) * T(t-1) + β * (B(t) - B(t-1)) for t = 4,…,N

Forecast: F(t) = B(N) + (t-N) * T(N) for t = N1,N2,…

/Shibu

Thanks for rewarding points if this is helpful

[Former Member · Accepted solution]

Hallo Shibu UP,

Thank you very much for your answer.

You are right, this is the Equation with 3 value as Initialization period.

I need to understood the equation of Initialization with 4,5,6....12 values as Initialization period.(i think that Modeling of Ex-post forecast is the same)

Initialization:

B(4)=?

T(4)=?

Modelling:

B(t) = (1 - α) * (B(t-1) + T(t-1)) + α * H(t)

T(t) = (1 - β) * T(t-1) + β * (B(t) - B(t-1)) for t = 5,…,N

Thank you very Much!!

BR

Andrea

[Former Member · Accepted solution]

I think that initialization Basic Value is calculated as avarege of value so:

Initialization:

B(t)=(V1V2.......Vn)/n + T(t)

The question is Trend initialization equation...

Sorry, but it could help me in order to solve many problem.

Thank you to all could help me!

Andrea