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Forecast Error

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Abstract

The standard deviation of the 1-month-ahead forecast error is used to determine how much safety stock is needed to satisfy the level of service to customers. An exact measure of the standard deviation is not easy to generate, however, estimates are used in its place. The way to estimate the standard deviation varies depending on the forecasting method in use (moving average, regression, discounting, smoothing). This chapter describes how to estimate the standard deviation for each of the forecast models presented in Chap. 1.

Keywords

  • Residual Error
  • Forecast Error
  • Prior Estimate
  • Safety Stock
  • Discount Model

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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  • DOI: 10.1007/978-3-319-26862-0_2
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© 2016 Springer International Publishing Switzerland

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Thomopoulos, N.T. (2016). Forecast Error. In: Elements of Manufacturing, Distribution and Logistics. Springer, Cham. https://doi.org/10.1007/978-3-319-26862-0_2

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