Examples of Forecast Alarms.
M3 DMP offers two Forecast Alarms, Forecast Alarm 1 & 2. To simplify the setting up of the Forecast Alarms they are available as separate formulae in the Scoreboard Properties setup page. Both Forecast Alarms can be set up using three different methods to establish the Calculated Deviation, CDev, which is used in the calculation of the alarm triggering. They are described in detail below.
Setting Up Forecast Alarm 1
Forecast Alarm 1 = |A(P) F(P)| > K * CDev
Example Using CDev = Exponential Smoothing
We want to set up an Alarm 1 that is triggered if this condition is met:
Actual Sales statistics Sales Forecast >= 3 * Calculated Deviation
To do this the following must be set up in the Calculation Setup of the Scoreboard Properties:
| M3 DMP Setup: | |
|---|---|
| ABS(M1(P) - M2(P) >= F1*CDev | |
| Formula: | Forecast Alarm 1 Demand check |
| M1: | Sales Statistics |
| M2: | Forecast |
| Mark: | Sales Statistics |
| Upper: | 3 |
| Bound: | Outside |
| CDev | |
|---|---|
| Type | Exponential smoothing |
| Smoothing (α) | 0.3 |
| CDev (P) | α*ABS(M1(P-1)-M2(P-1)) + (1-α)*CDev(P-1) |
| CDev for P1 | 0 |
| Periods | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
| M1 Sales Stat | 870 | 1000 | 800 | 940 | 1200 | 1470 | 860 | 900 | 1100 |
| M2 Forecast | 900 | 950 | 1000 | 1050 | 1100 | 1000 | 900 | 1110 | 1100 |
| CDev | 0 | 9 | 21,3 | 74,9 | 85,4 | 89,8 | 203,9 | 154,7 | 171,3 |
The green fields are indicating that Forecast Alarm 1 is activated.
Example Using CDev = Average Absolute Forecast Errors
| CDev | |
|---|---|
| Type | Average absolute forecast errors |
| Periods | 3 |
| CDev (P) | Average(3,ABS(M1(P-1)-M2(P-1))) |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
|---|---|---|---|---|---|---|---|---|---|
| M1 Sales Stat | 870 | 1000 | 800 | 940 | 1200 | 1470 | 860 | 900 | 1100 |
| M2 Forecast | 900 | 950 | 1000 | 1050 | 1100 | 1000 | 900 | 1110 | 1100 |
| CDev | N/A | N/A | N/A | 93,3 | 120,0 | 136,7 | 226,7 | 203,3 | 240,0 |
The green fields are indicating that Forecast Alarm 1 is activated.
Example Using CDev = Average Absolute From Mean Demand
| CDev | |
|---|---|
| Type | Average absolute error from Mean Demand |
| Periods | 3 |
| Mean demand MD | |
| N | 3 |
| CDev (P) | ( ABS (M1(P-1) - MD) + ABS(M1(P-2) - MD) + ABS(M1(P-..) - MD) + ABS(M1(P-n) - MD) ) / n |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
|---|---|---|---|---|---|---|---|---|---|
| M1 Sales Stat | 870 | 1000 | 800 | 940 | 1200 | 1470 | 860 | 900 | 1100 |
| M2 Forecast | 900 | 950 | 1000 | 1050 | 1100 | 1000 | 900 | 1110 | 1100 |
| MD | 890 | 913,3 | 980,0 | 1203,3 | 1176,7 | 1076,7 | 953,3 | ||
| CDev | N/A | N/A | N/A | 73,3 | 75,6 | 146,7 | 177,8 | 211,1 | 262,2 |
The green fields are indicating that Forecast Alarm 1 is activated.
Setting Up Forecast Alarm 2
The Forecast Alarms 2 formula looks like this:
Example Using CDev = Average Absolute Forecast Errors
We want to set up an Alarm 2 that is triggered if this condition is verified: Actual Average of Actual - Forecast >= 0.6* Calculated Deviation. To do this the following must be set up in the Calculation Setup of the Scoreboard Properties:
| M3 DMP Setup: | |
|---|---|
| AVG(n,ABS(M1(P) - M2(P))) >= K*CDev | |
| Formula: | Forecast Alarm 2 |
| M1: | Sales Statistics |
| M2: | Forecast |
| Mark | Sales Statistics |
| Upper: | 0.6 |
| Bound | Outside |
| n | 3 |
| CDev | |
|---|---|
| Type | Average absolute forecast errors |
| Periods | 3 |
| CDev | Average(3,ABS(M1-M2)) |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | |
|---|---|---|---|---|---|---|---|---|---|
| M1 Sales Stat | 870 | 1000 | 800 | 940 | 1200 | 1470 | 860 | 900 | 1100 |
| M2 Forecast | 900 | 950 | 1000 | 1050 | 1100 | 1000 | 900 | 1110 | 1100 |
| CDev | N/A | N/A | N/A | 93,3 | 120,0 | 136,7 | 226,7 | 203,3 | 240,0 |
The green fields are indicating that Forecast Alarm 1 is activated.