What is the purpuse of LAG in IO (SAP IBP)

[moggiemx79]

Hi Experts!

I'm confused about the use that IO gives to Lag MD. I don't understand what it represents, nor which role plays here.

I would appreciate it very much if someone can explain me.

Thanks!

[former_member244427 · Accepted solution]

Hello,

IBP IO uses forecast error and bias to plan for the inventory.

Now forecast error needs to be examined intermittently to check the deviations in the forecast. For example you do a weekly forecast cycle and lets say the lead time for procurement is 2 weeks, you would like to compare the actual procurement/shipment/delivery as compared to the forecast, but for that you need to store the value of the forecast 2 weeks ago, remember you do forecast every week so the forecast would change weekly, so we can say in this example lag is 2 weeks. This is called as forecast attainment. So it would tell you about the accuracy of the forecast and over all bias of the forecast, further it can be used to plan the inventory levels.

Also you can refer below SAP KBA for more clarity.

2593071 - IBP - Understanding how Forecast Error profile Calculation Settings affect MAD and MAPE calculations

Regards

Abhishek Rai

[Mengya_Zhao]

Each submission can have totally different forecast numbers based on market situations and the company's direction, so the Forecast figures will be drastically different, hence the Forecast Accuracy and Forecast Bias numbers will be also variable.

[lingaiahvanam]

Hi,

The lag master data type includes a list of all values for LAG that is used in the forecast accuracy calculation. Lag refers to the time lag of a forecast quantity between the date of creation of the forecast and the future forecast date. For example, forecasts created on January 1 for same-year forecast dates of January 1 and January 8 are lag 0 and lag 1 (one week), respectively.

LAG indicates the lead time between when the forecast was created and the forecast date.

Best Regards,

Lingaiah

[moggiemx79]

Thanks,

I understand now the definition, but I still have problems understanding why this definition should have to be considered in inventory optimization.

Thanks,

Héctor