What is mean absolute deviation in SAP SRD-SCM-DP - SCM-Demand Planning?

SAP Term: mean absolute deviation

• Component: SRD-SCM-DP

• Component Name: SCM-Demand Planning

• Description: The average of a series of deviations from expected figures. In demand forecasting the mean absolute deviation is the average difference between the forecasted demand and the actual demand over a period of time.

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• Key Concepts: 
  Mean absolute deviation (MAD) is a measure of dispersion in SAP Demand Planning. It is used to measure the variability of a set of data points from the mean. MAD is calculated by taking the average of the absolute differences between each data point and the mean. 
  
  How to use it: 
  In SAP Demand Planning, MAD is used to measure the accuracy of forecasts. It is calculated by taking the average of the absolute differences between each forecasted value and the actual value. This helps to identify any outliers or errors in the forecast. 
  
  Tips & Tricks: 
  When using MAD in SAP Demand Planning, it is important to remember that it is not affected by extreme values. This means that it can be used to identify outliers without being influenced by them. 
  
  Related Information: 
  MAD is related to other measures of dispersion such as standard deviation and variance. It can also be used in conjunction with other forecasting methods such as exponential smoothing and ARIMA models.