What is information criterion in SAP SCM-IBP-DM - Demand?

SAP Term: information criterion

• Component: SCM-IBP-DM

• Component Name: Demand

• Description: Measure for the relative quality of statistical models. The auto-ARIMA/SARIMA algorithm uses the selected information criterion to choose the optimal order for each component of the forecast calculation process autoregression, moving average, and differentiation. The following informaton criteria can be selected: AIC - Akaike information criterion AICc - Akaike information criterion corrected BIC - Bayesian information criterion

Smart SAP Assistant

• Key Concepts: 
  Information criterion is a term used in SAP's Demand Management component of the Supply Chain Management-Integrated Business Planning (SCM-IBP) suite. It is a measure of the quality of a model's fit to the data, and is used to compare different models and select the best one. It is based on the idea that a good model should not only fit the data well, but also be as simple as possible. 
  
  How to use it: 
  Information criterion can be used to compare different models and select the best one. It is calculated by taking into account both the goodness of fit of the model and its complexity. The lower the information criterion, the better the model. 
  
  Tips & Tricks: 
  When using information criterion to compare models, it is important to remember that a lower value does not necessarily mean that the model is better. It may be that a more complex model with a higher value is actually better suited for your needs. 
  
  Related Information: 
  Information criterion is related to other measures of model quality such as Akaike Information Criterion (AIC) and Bayesian Information Criterion (BIC). These measures are also used to compare models and select the best one.