Monitoring Forecast Accuracy

Forecasts are d5utamic and they are updated as more information becomes available. Hence, after selecting an appropriate forecasting method and the forecasts based on that method, it is important to continuously monitor the forecast accuracy. For this, one can use one or more of the forecast errors discussed in Section 2.9. In practice, another measme, called Tracking Signal, is also commonly used for monitoring forecast accmacy. 

Tracking signal Tracking signal at period k, denoted by TSt, is the ratio of Bias and MAD up to period k. hi other words. 

The numerator of Equation 2.20 can be positive, negative, or zero, while the denominator is always positive. Hence, TSjt can be positive, negahve, or zero for any k. Note that TS is always equal to +1 or -1. 

Unlike the forecast error defined in Section 2.9, tracking signal is not a single number. Instead it is a series of numbers, which can be used to detect changes in the pattern of the forecast. 

The generally acceptable values of TS are 6. When the tracking signals go outside these limits, the forecaster should be notified to determine the cause of fhese limit violations. 

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Schwartz, Z. Monitoring the Accuracy of Multiple Occupancy Forecasts. 

Forecasting by time series employs analysis of past demand and trends of demand to anticipate future demand. Any forecast or method of forecast can be tested for past accuracy. Accuracy is usually monitored by the deviation of the actual result from the forecast result. 

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