What is exponential smoothing in SAP SCM-APO-FCS - Demand Planning?

SAP Term: exponential smoothing

• Component: SCM-APO-FCS

• Component Name: Demand Planning

• Description: Method based on the premise that sales values for more recent periods have more impact on the forecast and should therefore be given more weight, while the weights for older periods will decrease at an exponential rate.

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• Key Concepts: 
  Exponential smoothing is a forecasting technique used in SAP's SCM-APO-FCS Demand Planning component. It is a statistical method used to predict future values based on past data. It uses a weighted average of past data points to create a forecast for future values. 
  
  How to use it: 
  Exponential smoothing can be used to create forecasts for demand planning in SAP's SCM-APO-FCS Demand Planning component. To use it, you will need to input historical data points into the system and then set the parameters for the exponential smoothing algorithm. The algorithm will then generate a forecast based on the data points and parameters. 
  
  Tips & Tricks: 
  When using exponential smoothing, it is important to choose the right parameters for the algorithm. The parameters should be chosen based on the type of data being used and the desired accuracy of the forecast. Additionally, it is important to regularly update the historical data points in order to ensure that the forecast is accurate. 
  
  Related Information: 
  Exponential smoothing is just one of many forecasting techniques available in SAP's SCM-APO-FCS Demand Planning component. Other techniques include moving averages, linear regression, and time series analysis. Additionally, there are various tools available that can help you analyze and visualize your data in order to make more informed decisions about your forecasts.