Number of Periods per Seasonal Cycle

[Former Member]

Dear DP Statistics Experts,

I have a very basic question

Scenario:

I have 4 years of historical demand calendar month wise

For a given Product (which is my selection ID on which forecast is being executed)

Every March-April and Oct-Nov each year, I have higher than average demand

Every Jun-July each year I have a lower than average demand

I know this highs and lows are because of certain events of rejoice and gloom resp and not really outliers.

I now create a forecast profile with a seasonal time series model. For reasoning sakes les use seasonal linear regression model 35

I use last 48 months of History and I generate forecast for next 24 months.

We are now in June 2013.

There is a parameter in the univariate profile > Model Parameters called PERIODS that expects a value of Number of Periods per Seasonal Cycle.

Given the above information what value should I enter here

A) 2

B) 4

B) 16

C) 12

D) 36

E) Some other Value

F) Ask the Client.. well he doesn't care or know either

G) Don't bother: Test each of these, get ok from the client and bill the client for the time taken

Assume that I am executing my statistical forecast in monthly periodicity with past periods = 48 and future periods = 24 on Product as a selection criteria.

I am not using Seasonal Planning in DP.. I don't know what is in there. This is standard APO DP.

The F1 help says this. Owing to my poor English language skills, I am unable to understand what this means esp. the one in bold below

Number of Periods per Seasonal Cycle

Specifies the number of periods (for example, months) in a season.

Procedure

If you are using a seasonal model (forecast strategies 30, 31, 35 and 54) or
a seasonal trend model (forecast strategies 40 and 41), or if the system is to
carry out a seasonal test (forecast strategies 52, 53 and 55), enter the number
of periods that make up a season.

Dependencies

The period is specified by the planning buckets profile you enter in the
master forecast profile.

Thanks

BORAT

[Former Member · Accepted solution]

Hi,

correct answer is 12, you want to "average" values each 12 months (jan-jan-jan, feb,-feb-feb

..). It is a little more involved than that (trend substraction and restitution), but that is the main insight.

There is a seasonal test (defined by this 12). If it fails, you may end up with an ordinary linear regressoon (and see no averages)

Alternatively, a season is defined by how many buckets it has inside. If history repets itself each 12 months (example, average monthly temperature), then the number of periods in your season is 12... if you are in monthly buckets. And there are 3 seasons in 36 months.  Of course, "repeats itself" is tricky.

Regards,

J.

Message was edited by: James S.A.

[Former Member · Accepted solution]

Thanks James,

Much appreciate the clear explanation. I used 12 blindly to test whenever I used a seasonal model to forecast, without bothering to see if seasonality indeed exists because I cant bother viewing graphically the 900 history sets that I have to reassure myself that data was indeed seasonal for the data grouping I forecast. In the example I gave above there are 4 periods of seasonal highs and lows in a given year. So I thought the value should be 4 in periods per season.. I yet to test.

That brings me the next question

If there is no seasonality and no outliers correction is checked (no sigma), and seasonal periods are still, used in forecast profile, I still see system proposing a seasonal model in the background where my selection ID is same as Aggregation levels and model used is Auto56

So is this a system problem or my problem of understanding ?.

Another related question

Is there a general advisory from SAP and other practioners on when NOT to use Automatic forecast strategies ?.or another way to put this question is under what conditions Auto 56 is not recommended. I kind of guess that Auto56 is not testing every model but that again could be my misunderstanding. I am reading some help literature and testing the same  using Java applets by Prof. Hossein Arsham that is much easier to understand.

Let me reproduce the screen shot for you. VPN takes ages to refresh the screen.

Many Thanks for the reply

Borat.