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  4. Why is my Demand Forecast Accuracy Zero?
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  4. Why is my Demand Forecast Accuracy Zero?

Why is my Demand Forecast Accuracy Zero?

This means that your Sales Forecast was too far from Actual Demand to return a positive value figure.

For example:

    IF Forecast Sales last year was 70,500 units
    AND Product Demand was 26,284 units

The difference is 70,500 – 26,284 = 44,216

As the difference is bigger than total actual demand we return zero for Demand Forecast Accuracy otherwise the calculation would return a negative value.

How to calculate Demand Forecast Accuracy

Demand Forecast Accuracy = 1 – (absolute value of Forecast error / actual demand)

where Actual Demand is the actual demand for the product, (including any Lost Sales due to insufficient production).

eg. if Forecast Sales was 20,000 units, and Actual Demand was 23,000 units, then

Demand Forecast Accuracy = 1 – (|20,000 – 23,000| / 23000)
= 1 – (3000 / 23000)
= 86.96%

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