What is autocorrelation in SAP SCM-APO-FCS - Demand Planning?

SAP Term: autocorrelation

• Component: SCM-APO-FCS

• Component Name: Demand Planning

• Description: Autocorrelation occurs when the error terms of a regression model are not independent; that is, when the values of historical periods in the forecast model are influencing the values of current periods. Time series with a strong seasonal or cyclical pattern are often highly correlated. Autocorrelation is undesirable because it can falsify the demand forecast. If you detect more than an acceptable level of autocorrelation, it means that you need to improve your MLR model. Durbin-h and Durbin-Watson are measures of autocorrelation.

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• Key Concepts: 
  Autocorrelation is a statistical measure of the correlation between values of a time series at different times. It is used to measure the degree of similarity between a given time series and a lagged version of itself. In SAP SCM-APO-FCS Demand Planning, autocorrelation is used to identify patterns in historical data that can be used to forecast future demand.
  
  How to use it: 
  Autocorrelation can be used in SAP SCM-APO-FCS Demand Planning to identify patterns in historical data that can be used to forecast future demand. To use autocorrelation, the user must first select the time series they wish to analyze and then calculate the autocorrelation coefficient for each lag. The user can then interpret the results to identify any patterns or trends in the data that can be used for forecasting.
  
  Tips & Tricks: 
  When using autocorrelation in SAP SCM-APO-FCS Demand Planning, it is important to remember that the results are only as good as the data being analyzed. Therefore, it is important to ensure that the data being used is accurate and up-to-date. Additionally, it is important to remember that autocorrelation only measures linear relationships between values in a time series, so any non-linear relationships will not be detected.
  
  Related Information: 
  For more information on autocorrelation and how it can be used in SAP SCM-APO-FCS Demand Planning, please refer to the official SAP documentation on Autocorrelation Analysis (https://help.sap.com/doc/saphelp_scm70_ehp04/7.0/en-US/f3/f3d8a9f2b611d1897e0000e8322d00/content.htm). Additionally, there are many online resources available that provide further information on autocorrelation and its applications in forecasting.