What is alpha in SAP SRD-SCM-DP - SCM-Demand Planning?

SAP Term: alpha

• Component: SRD-SCM-DP

• Component Name: SCM-Demand Planning

• Description: A smoothing factor used by the seasonal trend method of forecasting.

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• Key Concepts: 
  Alpha is a statistical measure used in SAP Demand Planning to measure the accuracy of a forecast. It is calculated by taking the ratio of the sum of the absolute errors (SAE) to the sum of the absolute values of the actual demand (SAD). The higher the alpha value, the more accurate the forecast. 
  
  How to use it: 
  Alpha is used to measure the accuracy of a forecast in SAP Demand Planning. To calculate alpha, you need to first calculate the SAE and SAD values. The SAE is calculated by taking the absolute value of each error (the difference between the actual demand and forecasted demand) and summing them up. The SAD is calculated by taking the absolute value of each actual demand and summing them up. Once you have these two values, you can calculate alpha by dividing SAE by SAD. 
  
  Tips & Tricks: 
  When calculating alpha, it is important to remember that a higher alpha value indicates a more accurate forecast. Therefore, it is important to strive for a higher alpha value when creating forecasts in SAP Demand Planning. 
  
  Related Information: 
  For more information on alpha and other statistical measures used in SAP Demand Planning, please refer to SAP's official documentation on Demand Planning.