What is weighted mean absolute percentage error in SAP SCM-IBP-DM - Demand?

SAP Term: weighted mean absolute percentage error

• Component: SCM-IBP-DM

• Component Name: Demand

• Description: A standard method for calculating the forecast error.

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• Key Concepts: 
  Weighted Mean Absolute Percentage Error (WMAPE) is a metric used to measure the accuracy of a demand forecasting model. It is calculated by taking the average of the absolute percentage errors of each forecasted value, weighted by the actual demand. This metric is used in SAP's SCM-IBP-DM Demand Forecasting component to measure the accuracy of a demand forecasting model. 
  
  How to use it: 
  WMAPE is calculated by taking the average of the absolute percentage errors of each forecasted value, weighted by the actual demand. To calculate WMAPE, first calculate the absolute percentage error for each forecasted value by subtracting the actual demand from the forecasted value and dividing it by the actual demand. Then, multiply each absolute percentage error by its corresponding actual demand and sum up all these values. Finally, divide this sum by the total actual demand to get WMAPE. 
  
  Tips & Tricks: 
  WMAPE is a useful metric for measuring the accuracy of a demand forecasting model because it takes into account both the magnitude and direction of errors in forecasts. It is also useful because it can be used to compare different models and identify which one is more accurate. 
  
  Related Information: 
  WMAPE is just one of many metrics used to measure the accuracy of a demand forecasting model. Other metrics include Mean Absolute Error (MAE), Mean Squared Error (MSE), and Root Mean Squared Error (RMSE).