How is forecast accuracy typically measured in demand planning?

Forecast accuracy in demand planning is generally measured by comparing multiple forecast scenarios. This approach allows planners to evaluate the performance of different forecasting methods and models against actual demand, providing insights into which techniques yield the most accurate predictions. By examining various scenarios, businesses can identify patterns, assess risk, and adjust their strategies to enhance forecast accuracy. Understanding these comparisons helps organizations make better-informed decisions regarding inventory management, production schedules, and resource allocation.

While reviewing the budget versus actual expenses relates to financial performance, it doesn't directly measure forecast accuracy in demand planning. Customer feedback, although valuable for understanding market trends and preferences, does not systematically quantify forecast performance. Analyzing past sales performance is essential for generating forecasts, but it is not as comprehensive as comparing multiple forecast scenarios, which incorporates diverse perspectives on potential demand outcomes.