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