Forecast with First-Order Exponential Smoothing Model

Purpose

With this process the system executes a forecast with the first-order exponential smoothing model. This forecast model is set as standard. You can choose another model manually, or the system can replace this model with another one. The ‘first-order exponential smoothing’ model needs a small amount of demand history information and uses first-order exponential smoothing to determine future demand. The forecast with this model is constant.

Before calculating the forecast, the system executes model initialization and outlier correction . After calculating the forecast, the system calculates the standard deviation and the MAD .

For more information about how the system chooses this model, see Automatic Model Selection .

Process

The system executes the forecast with the ‘first-order exponential smoothing’ model according to the following formula:

This graphic is explained in the accompanying text.

F(p+1) is the forecast for the next period.
B(p) is the basic value.
V(p) is the final history of the last period.

This value is displayed in the Final History key figure on the Adjust Demand History screen. You get to this screen on the SAP Easy Access screen under Advanced Planning and Optimization Service Parts Planning (SPP) Environment Data Management .
Alpha is the smoothing constant. You can specify this on the SAP Easy Access menu under Advanced Planning and Optimization Service Parts Planning (SPP) Planning Forecast Forecast Profile on the Model Parameter tab page in the Alpha Factor field.