Comparing multiple evaluation metrics is the only way to ensure your forecasting models actually reflect reality. Relying on a single metric can mask critical errors, whereas analyzing MAPE, MAD, and MSD together quantifies how well a specific model aligns with the unique demand characteristics of your inventory. This comparative approach is vital for distinguishing between the stable predictability of classic footwear and the rapid fluctuations inherent in trendy styles.
diverse product portfolios require diverse analytical tools. By comparing MAPE, MAD, and MSD, manufacturers can match the right forecasting method to the specific volatility of each shoe style, directly improving the reliability of production planning.
Aligning Metrics with Demand Characteristics
The Stability of Classic Styles
Classic footwear styles typically exhibit consistent, stable demand patterns over long periods.
For these products, models must prioritize precision and minimize variance. Comparing metrics ensures that the chosen model captures this stability without overreacting to minor noise in the sales data.
The Volatility of Trendy Styles
In contrast, trendy styles are subject to rapid, often erratic fluctuations driven by consumer behavior and seasonality.
A forecasting model that works for a stable sneaker may fail catastrophically for a high-fashion boot. Analyzing multiple error metrics helps identify models that are robust enough to handle these sudden shifts without generating massive inventory errors.
Quantifying Model Performance
Capturing Percentage Errors (MAPE)
MAPE (Mean Absolute Percentage Error) provides a relative view of accuracy.
It is particularly useful for comparing performance across different product lines that may have vastly different sales volumes. However, it can sometimes be misleading if sales volumes drop near zero.
Assessing Absolute Magnitude (MAD)
MAD (Mean Absolute Deviation) measures the average size of the errors in units.
This metric gives you a tangible sense of "how many pairs wrong" the forecast is on average. It provides a grounded, operational view of error that translates directly to warehouse space and logistics.
Penalizing Large Deviations (MSD)
MSD (Mean Squared Deviation) squares the errors, which disproportionately penalizes large misses.
This is critical for volatile, trendy styles where a massive forecast error could result in significant dead stock or lost sales. If MSD is high, it indicates the model is struggling with outliers or extreme demand spikes.
Understanding the Trade-offs
No Single "Best" Number
It is rare for one forecasting model to score the lowest on MAPE, MAD, and MSD simultaneously.
You will often face a trade-off where one model has a better percentage error (MAPE) but fails to penalize large outliers (higher MSD). You must weigh these metrics against your specific inventory goals for that specific shoe style.
The Context of Volatility
A high error rate isn't always the fault of the model; sometimes it reflects the inherent unpredictability of the market.
Do not discard a model simply because the MSD is high for a trendy product. If the product demand itself is erratic, the metric reflects the market reality, not necessarily a model failure.
Making the Right Choice for Your Inventory
To optimize your production planning, apply these metrics based on the specific behavior of the footwear category.
- If your primary focus is Classic Styles: Prioritize MAD and MAPE to ensure consistent, high-precision replenishment for stable, high-volume items.
- If your primary focus is Trendy Styles: Pay close attention to MSD to identify and penalize models that fail to catch large, sudden swings in demand.
By selecting the forecasting method that yields the best balance of metrics for each category, you transform raw data into a resilient production plan.
Summary Table:
| Metric | Full Name | Key Focus | Best Use Case |
|---|---|---|---|
| MAPE | Mean Absolute Percentage Error | Relative accuracy (%) | Comparing performance across different product lines |
| MAD | Mean Absolute Deviation | Absolute error (units) | Operational planning and understanding warehouse impact |
| MSD | Mean Squared Deviation | Large error penalty | Tracking volatile/trendy styles to avoid stockouts or deadstock |
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References
- Novia Fuji Lestari, Yuanita Handayati. Analysis of Inventory Management in Order to Reduce Overstock (Case Study of TVF Footwear). DOI: 10.5281/zenodo.7101489
This article is also based on technical information from 3515 Knowledge Base .
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