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Process documentation Model Initialization Locate the document in its SAP Library structure

Purpose

Model initialization is the process by which the system determines the necessary model parameters for the chosen forecast model. These parameters are as follows:

Model

Model parameters

Constant models

Basic value = Hist(1) where Hist(i) is the ith historical value

Trend value = 0

Seasonal indices = 1

Mean absolute deviation (MAD) = 0

Trend models

Trend value =

This graphic is explained in the accompanying text

 

Basic value =

This graphic is explained in the accompanying text

 

Seasonal indices = 1

 

Mean absolute deviation (MAD) =

This graphic is explained in the accompanying text

Seasonal models

Basic value = Mean of the historical values of the first historical season

Trend value = 0

Seasonal index for a period = Historical value for that period divided by the basic value

Mean absolute deviation (MAD) = 0

Seasonal trend models

Trend value =

This graphic is explained in the accompanying textwhere Hist(i) is the ith historical value and SL is the length of a season.

 

Basic value =

This graphic is explained in the accompanying text

 

Seasonal index for a period =

This graphic is explained in the accompanying text

where S(i) is the ith seasonal index.

 

Mean absolute deviation (MAD) =

This graphic is explained in the accompanying text

 

The system uses a fixed number of historical values to carry out model initialization. This number depends on the forecast model:

Model

Fixed number of historical values used for initialization

Constant

1

Trend

3

Seasonal

1 season

Seasonal trend

3 + 1 season

Automatic model selection with selection with seasonal test

2 seasons

Automatic model selection with seasonal + trend tests

3 + 2 seasons

2nd-order exponential smoothing

3

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