Question 1

What is a good MAPE for demand forecasting?

Accepted Answer

MAPE (mean absolute percentage error) is how far off, on average, your forecast was from actual demand, as a percentage. There is no universal target — it depends on the product and how volatile demand is — but the real test is whether your forecast beats a naive "next period equals this period" guess. A sophisticated forecast that is no better than naive is adding no value.

Question 2

What is the difference between accuracy and bias?

Accepted Answer

Accuracy metrics like MAPE and MAD measure the size of the error, ignoring direction. Bias measures direction — whether the forecast is consistently too high or too low period after period. A forecast that is sometimes 10% high and sometimes 10% low is inaccurate but unbiased; one that is consistently high is biased, and bias often has a human or incentive cause.

Question 3

What is the tracking signal?

Accepted Answer

The tracking signal is the running sum of forecast errors divided by the mean absolute deviation (MAD). It behaves like a control chart: when it drifts beyond about ±4 the forecast is out of control and systematically biased, and should be recalibrated rather than left to run.

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