1. What is Demand Forecast Accuracy?

Definition: Forecast accuracy measures how close your predictions are to actual demand values.

Purpose: It helps businesses evaluate the effectiveness of their forecasting models and inventory planning.

2. How Does the Formula Work?

The calculator uses the formula:

Where:

• Forecast — Predicted demand value
• Demand — Actual observed demand
• |Forecast - Demand| — Absolute difference between forecast and actual

Explanation: The formula calculates the percentage accuracy by comparing the forecast error relative to actual demand.

3. Importance of Forecast Accuracy

Details: Accurate demand forecasting helps optimize inventory levels, reduce costs, and improve customer satisfaction.

4. Using the Calculator

Tips: Enter your forecasted value and actual demand value. The actual demand must be greater than 0.

5. Frequently Asked Questions (FAQ)

Q1: What does 100% accuracy mean?
A: 100% means your forecast exactly matched actual demand.

Q2: Can accuracy be negative?
A: Yes, if your forecast is more than double the actual demand, accuracy can go below 0%.

Q3: What's considered good accuracy?
A: Typically 80-95% is good, but this varies by industry.

Q4: How can I improve forecast accuracy?
A: Use better data, more sophisticated models, and regularly update forecasts.

Q5: Should I use this for all products?
A: High-value or high-volume items typically deserve more accurate forecasting.