What is adjusted R square in SAP (SCM-APO-FCS - Demand Planning)?

SAP Term: adjusted R square

• Component: SCM-APO-FCS

• Component Name: Demand Planning

• Description: In a multiple linear regression model, adjusted R square measures the proportion of the variation in the dependent variable accounted for by the explanatory variables. Unlike R square, adjusted R square allows for the degress of freedom associated with the sums of the squares. Therefore, even though the residual sum of squares decreases or remains the same as new explanatory variables are added, the residual variance does not. For this reason, adjusted R square is generally considered to be a more accurate goodness-of-fit measure than R square. Points to note when using adjusted R square: If adjusted R square is significantly lower than R square, this normally means that some explanatory variables are missing. Without them, the variation in the dependent variable is not fully measured. When comparing two models with this measure, make sure you use the same dependent variable.

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• Key Concepts: 
  Adjusted R Square is a statistical measure used to evaluate the performance of a regression model. It is a modified version of the R Square statistic, which is used to measure the amount of variation in a dependent variable that is explained by an independent variable. The adjusted R Square takes into account the number of independent variables in the model, and adjusts the R Square accordingly. 
  
  How to use it: 
  In SAP SCM-APO-FCS Demand Planning, Adjusted R Square can be used to evaluate the performance of a regression model. It can be used to compare different models and determine which one best explains the variation in the dependent variable. The higher the Adjusted R Square, the better the model is at explaining the variation in the dependent variable. 
  
  Tips & Tricks: 
  When using Adjusted R Square to evaluate a regression model, it is important to remember that it only measures how well the model explains the variation in the dependent variable. It does not measure how accurate or precise the predictions are. Therefore, it should not be used as a measure of accuracy or precision. 
  
  Related Information: 
  For more information on Adjusted R Square and other statistical measures, please refer to SAP SCM-APO-FCS Demand Planning documentation. Additionally, there are many online resources available that provide more detailed information on Adjusted R Square and other statistical measures.