A Framework for Analyzing Forecast Accuracy Metrics

Demand Planning forecasts at Nike, Inc. are used by many groups: Supply Planning/Materials Planning, Sourcing, Categories/Merchandising, Finance, S&OP, and Sales. These groups take forecasts as an input to make key decisions. Forecasts, by nature, will be inaccurate. There are two big unknowns to answer as Nike considers how to improve forecast accuracy: 1) how accurate can or should forecasts become (target setting) and 2) what are the causes and impacts of inaccuracy. However, the first step to addressing these questions is to understand and measure forecast accuracy metrics in a consistent way across Nike's various Demand Planning groups. This project investigates the following through the design of a Tableau dashboard * which metrics should be reviewed (accuracy, bias, volatility, etc.) * how they should be computed (what to compare) * at what level of aggregation for which groups * at what level of detail for which groups (category, classification, etc.) * over how many seasons * with which filters In addition to aligning on forecast accuracy metrics, the project also focuses on the dashboard design (determining the most appropriate structure/views, how information is laid out or presented, and the use of labels and color) and on setting the long-term vision for viewing and using forecast accuracy metrics through researching and outlining the process for root cause analysis and target setting.

Department dc:contributor.department

Leaders for Global Operations Program at MIT

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2015

Author dc:creator

• Wu, Yalu

Advisor dc:contributor.advisor

• Stephen Graves and David Simchi-Levi.

• Civil and Environmental Engineering.
• Sloan School of Management.
• Leaders for Global Operations Program.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/99572

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/99572