What is Theil coefficient in SAP PP-MP - Production Planning?

SAP Term: Theil coefficient

• Component: PP-MP

• Component Name: Production Planning

• Description: A measurement that indicates the quality of the forecast model used compared with the "primitive forecast." The primitive forecast uses the last historical value for the forecast value. The Theil coefficient is: 1 if the forecast model selected is of the same quality as the "primitive model" less than 1 if the forecast model selected is better than the "primitive model" greater than 1 if the forecast model selected is not as good as the "primitive model"

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• Key Concepts: 
  Theil coefficient is a measure of the degree of concentration of a given variable. It is used in Production Planning and Master Production Scheduling (PP-MP) in SAP to measure the degree of concentration of a given production order. The coefficient is calculated by dividing the sum of the squares of the production order values by the sum of all production order values. 
  
  How to use it: 
  Theil coefficient can be used to measure the degree of concentration of a given production order. This can be done by calculating the coefficient for each production order and then comparing it to the average Theil coefficient for all production orders. If the Theil coefficient for a particular production order is higher than the average, then it indicates that this production order is more concentrated than other orders. 
  
  Tips & Tricks: 
  When using Theil coefficient to measure the degree of concentration of a given production order, it is important to consider other factors such as the size and complexity of the order. Additionally, it is important to consider how long it takes to complete each order and how much time is spent on each task. This will help ensure that the Theil coefficient accurately reflects the degree of concentration for each production order. 
  
  Related Information: 
  Theil coefficient can also be used in other areas such as marketing and finance. For example, it can be used to measure market concentration or financial risk. Additionally, Theil coefficient can be used to compare different products or services in terms of their market share or profitability.