What is root mean square error in SAP (SRD-SCM-DP - SCM-Demand Planning)?

SAP Term: root mean square error

• Component: SRD-SCM-DP

• Component Name: SCM-Demand Planning

• Description: The square root of the difference between forecasted demand and actual demand, squared, and divided by the number of periods covered.

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• Key Concepts: 
  Root mean square error (RMSE) is a measure of the difference between values predicted by a model and the values observed. It is calculated by taking the square root of the average of the squared differences between predicted and observed values. RMSE is a commonly used measure of the accuracy of predictions from a model. 
  
  How to use it: 
  In SAP Demand Planning, RMSE is used to measure the accuracy of a forecast model. It is calculated by taking the square root of the average of the squared differences between predicted and observed values. The lower the RMSE, the better the model is at predicting future values. 
  
  Tips & Tricks: 
  When using RMSE to evaluate a forecast model, it is important to consider other factors such as bias and seasonality. Additionally, it is important to compare RMSE with other measures such as mean absolute error (MAE) or mean absolute percentage error (MAPE). 
  
  Related Information: 
  RMSE is closely related to other measures such as mean absolute error (MAE) and mean absolute percentage error (MAPE). MAE measures the average magnitude of errors in a set of predictions, while MAPE measures the average percentage error in a set of predictions.