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I saw this news article on CNN here aboutour

planets earth bigger, older cousin. Quite an CONNECT WITH
interesting discovery if you ask me. However, it got ARKIEVA
me to thinking about the family tree of Mean
Absolute Forecast Error MAPE, a subject that I am

a little bit familiar with.

A few weeks ago, I wrote about the two sides of the
MAPE coin. After the post, I got a lot of feedback
around varying ways practitioners and researchers FEATURED
have modified the MAPE. For me, these variations WHITEPAPERS
represent the family tree of MAPE

As mentioned in the previous article, the MAPE

consists of two parts: M and APE. The formula for
APE is:

The M stands for mean or average and is simply

the average of the calculated APE numbers across
different periods, and is derived by dividing the
APE by the number of periods considered. In all the
formulas shown below, I am leaving out the M part
of the formula on purpose.
VIEW ALL
WHITEPAPERS
MAPE has many criticisms around its asymmetry as
well as how it performs near extremes for example
when actuals = 0. Most of the debate is around RECENT POSTS
whether or not the denominator Actuals is the
right one. This debate has over time resulted in the
variations described below.

Divide by Forecast: This definition changes the

5 Ways to
denominator from Actuals to forecast. People who
Optimize Your
favor this method are concerned with the fact that
Logistics &
MAPE encourages underforecasting. However, Transportation
they do not realize they fix one problem and create with Lean

another. Dividing the error by forecast simply

 favors larger forecasts as they result in lower 7 Supply Chain
Technology
percentage error. The formula is:
Trends Set to
Disrupt Supply
Chains in 2017
and Beyond

I have seen this method used in many CPG

companies.

Dividing by the mean of Actual and Forecast: Creating a

This definition changes the denominator to Sourcing and
[Actuals + Forecast / 2]. Proponents of this Procurement
Process Plan
formula typically lament the inherent asymmetry or
bias in the MAPE formula it favors low forecast
and tries to counter by changing the denominator
in the manner described above. The claim is this
A New Year
makes the measure more symmetric or unbiased
Resolution for
and therefore goes by the name of symmetric Supply Chain
MAPE or sMAPE or Unbiased MAPE or UMAPE or Planners: Stop
even UAPE. The formula is: Firefighting

SOLUTIONS ABOUT NEWS AND EVENTS RESOURCES

Top 2016 Supply

118 For what it is worth, this formula, while more Chain Strategy
DEMO REQUEST Posts from the
symmetric than the original MAPE, is still not
Supply Chain Link
completely unbiased. I have not seen it used many
Blog
places.

Dividing by the maximum of Actual and

Forecast: This definition changes the denominator

to [MAX Actuals + Forecast]. Folks who prefer this

 formula tout the fact it is stricter in how it reports

the error and does not allow anyone with
consistent under or over forecasting. It does not
necessarily concern itself with symmetry at all. It is
recognized as the Normalized MAPE or nMAPE.
The formula is:

Take the median instead of the mean: This

definition keeps the original formula for the APE
portion of the calculation; but in the end, it looks
for the median value or the middle value versus

the mean value of the overall distribution. This
typically works better when the underlying data is
skewed and the corresponding APE values are not
normally distributed. In this case, one should take
the median value into consideration. As you can
imagine, this method is called Median APE or
SOLUTIONS ABOUT NEWS AND EVENTS RESOURCES
MdAPE.

I must give credit to Hans Levenbach who posted

this formula in a recent LinkedIn discussion. I have
118
never
DEMOused this metric myself.
REQUEST

Weighted MAPE: This is one of my favorite ways

of measuring and reporting forecast accuracy, and I

discussed it in some detail here. There are many

variations, but the most popular one is the volume

weighted MAPE and the formula very concise:

 This metric is very popular and also highly

recommended for use when reporting forecast
accuracy to top management.

I am sure I have missed a few variations of MAPE

and also very sure that new ones will be invented in
the future. If anything, this points to the popularity
of MAPE as a forecast accuracy measurement.

Do you use a different version of MAPE? If so, I am

interested in hearing from you.

Like this blog? Follow us onLinkedInorTwitterand

we will send you notifications on all future blogs.

PS: I originally wanted to name this blog MAPE

and his/her/its cousins. But could not decide
which gender to use. What do you think? Please
provide your comment if you do not mind
SOLUTIONS ABOUT NEWS AND EVENTS RESOURCES
indulging me a bit.

118
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By Sujit Singh | July 28th, 2015 | Forecasting | 5 Comments

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118
Share This
Article.
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About the Author: Sujit Singh

As COO of Arkieva, Sujit manages the

daytoday operations at Arkieva such
 as software implementations and customer
relationships. He is a recognized subject matter
expert in forecasting, S&OP and inventory
optimization. Sujit received a Bachelor of
Technology degree in Civil Engineering from the
Indian Institute of Technology, Kanpur and an M.S.
in Transportation Engineering from the University
of Massachusetts. Throughout the day dont be
surprised if you find him practicing his cricket
technique before a meeting.

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5 Comments

saravanan kesavan July 30, 2015 at 2:29 pm Reply

Hi Sujit

 Glad to see the different versions of MAPE

summarized in one place. Perhaps another
post that distinguishes applications where
one version is better than the other ? For
example, in the stock market context
earnings per share EPS can often be zero
so perhaps avoiding actual and forecast
in the denominator may make sense??
Anyways, there I have indulged you!!

Sujit Singh August 1, 2015 at 4:05 pm Reply

Thanks Kesavan, Good to hear from

you. I will incorporate your

suggestions about which is better in
a future post. On your comment
about dividing by 0, perhaps consider
nAPE that I briefly described in the
post above.

SOLUTIONS ABOUT
Hope all is well NEWS AND EVENTS
with you. RESOURCES

Stefan de Kok July 31, 2015 at 4:35 am Reply

118 Hi Sujit,
DEMO REQUEST

one small semantic but confusing error in

the above formulas: the word Actual
should be singular, not plural. Many

people incorrectly take the ABS of the

SUM of differences instead of the SUM of

the ABS of differences. The plural use

 would not make it evident that that is

incorrect, though it is clear from the
supporting text that you use it correctly.

As you know my personal issue with

textbook MAPE is that it is overly sensitive
to periods with zero demand: it takes just
one to make the MAPE undefined. And
any weighted average for aggregates have
to ignore those values to report an overall
value, in effect misreporting. Even one
zero for one item in an entire portfolio
causes this misreporting.

For this reason I have for a long time

favored the nAPE since it does not have
this issue except for the trivial cases.
However, note that it is LESS STRICT,
always reporting a lower error than every
other alternative.
SOLUTIONS ABOUT NEWS AND EVENTS RESOURCES
One of the more commonly used
corrections to the MAPE is the MAD/Mean
ratio, which has formula SUMt[

118 ABSActualt Forecastt] / SUMt[

DEMO REQUEST
Actualt ]. This is the exact formula for a

single item that you report as VWAPE

above. I added the t to make it clear

*what* the sum is over: periods, not items.

The VWAPE or WMAPE I have always used

a different formula: SUMi[ MAPEi *

 volumei ] / SUMi [volumei ], which is

actually identical to the one in your blog
post you link to. MAPEi is then the
textbook MAPE for item i. If you expand it,
it becomes rather more complex than the
formula you give above since the period
sums cannot be combined with the item
sums in general without changing the
result drastically much lower error
reported.

Apologies for pointing out the errors. I

may be a bit nitpicky. I greatly appreciate
that this kind of content is created since

there is a lot of confusion in this area so
when a respected source publishes
something I think it is important it be
correct even to the nitpicky detail.

Feel free to just make any corrections in

SOLUTIONSyour article
ABOUT NEWS AND
and not publish EVENTS
my comment! RESOURCES

Stefan

Sujit Singh August 1, 2015 at 4:07 pm Reply

118
DEMO REQUEST
Thanks Stefan,
Good comments. I will have to be

more careful in the future.

Appreciate the thought. Please keep

the communications going. I hope all

is well with you.

 Sujit Singh August 1, 2015 at 4:22 pm Reply

Hi Stefan,
Also, I wanted to add: I agree that it is
the SUM of the errors, not the error
of the SUMs. Or, as you put it:
one small semantic but confusing
error in the above formulas: the word
Actual should be singular, not
plural. Many people incorrectly take
the ABS of the SUM of differences
instead of the SUM of the ABS of
differences. The plural use would not
make it evident that that is incorrect,
though it is clear from the supporting
text that you use it correctly.

I see your point about wanting to use

Actual as opposed to my Actuals. I
like Actuals because in my mind,
SOLUTIONS ABOUT NEWS AND EVENTS RESOURCES
forecasting is a bucket based process.
In a bucket, there is one forecast
hence the singular forecast as

118 opposed to many actual demand line

DEMO REQUEST
items hence the plural Actuals.

I fully admit that I did not check the

textbook version and I would not be

surprised if my use was wrong. It has

happened before and will happen

again I am sure. But in this context, I

prefer the use of the word Actuals.

 Thanks again

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