What is smoothing factor in SAP MM-PUR - Purchasing?

SAP Term: smoothing factor

• Component: MM-PUR

• Component Name: Purchasing

• Description: A value enabling the user to determine the extent to which a current new value used in a calculation influences the result. The smoothing factor can have a value between 0 und 1. A high smoothing factor causes the result to be changed significantly, whereas a low one makes little difference. A smoothing factor is used in vendor evaluation, for example, when a new individual score for on-time delivery performance awarded to a vendor in respect of a goods receipt is included in the previously valid overall score for this criterion. Because the previous overall score represents the scores from a number of goods receipts whereas the score for the most recent goods receipt is merely an individual score, the influence of the new goods receipt in the calculation of the new overall score is small that is, it is smoothed.

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• Key Concepts: 
  Smoothing factor is a feature in SAP MM-PUR Purchasing that allows users to adjust the forecasted demand for materials and services. It is used to reduce the volatility of the forecasted demand and to make it more accurate. The smoothing factor is calculated based on the historical demand data and can be adjusted by the user. 
  
  How to use it: 
  In order to use the smoothing factor, users must first enter the historical demand data into SAP MM-PUR Purchasing. Once this is done, the system will calculate the smoothing factor based on this data. The user can then adjust the smoothing factor as needed in order to reduce the volatility of the forecasted demand. 
  
  Tips & Tricks: 
  It is important to note that adjusting the smoothing factor too much can lead to inaccurate forecasts. Therefore, it is important to adjust it carefully and only when necessary. Additionally, it is important to regularly review and update the historical demand data in order to ensure that the smoothing factor is accurate. 
  
  Related Information: 
  The smoothing factor is closely related to other features in SAP MM-PUR Purchasing such as forecasting methods and safety stock levels. It is important to understand how these features interact with each other in order to ensure that the forecasted demand is accurate.