Whitepaper

Demand
management
forecasting
Parameters
Amit Ben Zvi

WHITE PAPER / APRIL 19, 2019

DISCLAIMER
The following is intended to outline our general product direction. It is intended for information
purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any
material, code, or functionality, and should not be relied upon in making purchasing decisions. The
development, release, and timing of any features or functionality described for Oracle’s products
remains at the sole discretion of Oracle.

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Table of Contents
Contents

Introduction .................................................................................................. 4

How to configure Forecasting parameters ................................................... 4

Paramaters not included on the List ............................................................ 6

Forecasting Parameters .............................................................................. 6

Accesing the Parameters directly .............................................................. 10

Conclusion ................................................................................................. 10

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 INTRODUCTION

The Demand management (DM) analytical engine has various analytical settings to it, configured as part of a
“Forecasting Profile”.

The seeded forecasting profile is fixed, and cannot be modified, but other, user-defined, profiles have various
configuration options for them. For example, configuring the forecast tree structure, selecting various forecasting
methods, causal factors, and forecasting parameters.

This paper will focus on the Forecasting parameters, will describe and explain how to configure them.

HOW TO CONFIGURE FORECASTING PARAMETERS

The Forecasting parameters are included as part of an Engine profile.

They have a dedicated tab, called Forecasting Parameters in Manage Forecasting Profiles

The initial screen shows only part of the available parameters. In order to see the additional list of parameters,
the user needs to press the Plus menu option..

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 The user should select the desired parameter, and press Add and the parameter will be available for
configuration on the main Forecasting parameters screen.

PARAMETERS NOT INCLUDED ON THE LIST

Not all parameters are available for configuration. Some parameters are defined on the plan level.

Examples are ‘ForecastHorizon’, ‘HistoryLength’ and more.

FORECASTING PARAMETERS

The list of available parameters is as follows.

It is important to understand that ALL parameters settings, regardless of the plan/forecasting time aggregations
are defined in days.

Even if the parameter description refers to Time periods, it should be considered, when configuring, as a
number of days.

Data Smoothing and Cleansing PARAMETERS:

Parameter Parameter Description

CollinearityMaxRatio Specifies the maximum ratio between forecast and history demand values.
Can be set to any integer greater than one. Forecast exceeding this
threshold will fail validation.

CollinearityTolerance Specifies the parameter controlling sensitivity of collinearity detection.

Possible value range is between 1 and 100,000. Default value of 1 detects
very strong cases where large values such as 1000 would detect weaker
cases.

CollinearityUseRidge Specifies the method to handle collinearity in causal factors. Parameters

values may be 0, 1, 2. 0 for treatment of collinearity. 1 for Use Ridge
regularization. 2 for Use QR decomposition.

CutLeadingZeros Controls how leading zero data is managed. Parameters values may be
Yes or No. Yes to remove leading zero data found in time series. No to
leave leading zero data.

FillMissingMethod * Specifies how to fill any null historical values. Parameter values may be 0,
1, 2. 0 for no missing values filed. 1 for linear interpolation based on not
missing neighbors. 2 for omitting missing values.

* Currently (as of version 19A) only Linear interpolation is available for FillMissingMethod

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 Forecast Adjustment PARAMETERS:

Parameter Parameter Description

AllowNegativeForecast Specifies whether negative values of fit and forecast are allowed. If
negative values are not allowed, then any not positive values are set to
zero.

EnableNonNegRegr Controls whether normal or constrained regression is performed.

Parameters values may be No or Yes. No will perform unconstrained
regression. Yes will constrain all regression coefficients to be not negative.

LogCorrection Specifies whether to use a corrected form of a normalized log variable

expectation. Parameters values may be No or Yes. When No it disables log
correction. When Yes it enables log correction. Should be enabled when
demands are very frequently varying between 0 and 1.

SmoothCroston Used when Croston forecast method is the only method that succeeded
forecasting the time series. Parameters values may be 0 or 1. If 0 the
output is the unmodified Croston intermittent values. If 1 the output is the
intermittency adjustment after smoothing.

SmoothIntermittent Used by intermittent forecasting methods. Controls whether to produce a

spiky sparse forecast or a continuous one.

Forecast Status PARAMETERS:

Parameter Parameter Description

GlobalAlllocTreatMissing Controls how missing dates are treated when calculating average demand.
Parameters values may be 0 or 1. If 0 the missing dates are treated as 0
demand observations. If 1 the missing dates are treated as missing without
making assumptions about their value.

GlobalAllocationPeriods Specifies the number of days to use for average demand calculation.

PeriodsUntilActive Controls whether a combination will be set to active. If the specified number
of time periods have elapsed from first demand, the combination will be
marked as active. Otherwise, the combination will remain marked as
immature.

PeriodsUntilInactive Specifies whether to mark a combination as discontinued. If no demand

has occurred in a specified number of recent time periods it will be marked
as discontinued and not receive a forecast.

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 General settings PARAMETERS:

Parameter Parameter Description

EnableModifiedVariance Specifies how the variance is calculated when determining weights during
the model averaging process.

EnableNaiveForecast Specifies whether naive modeling will be used, and if so, what type.
Parameter values may be 0 or a positive integer. Use 0 to disable naive
modeling. 1 to use Oracle proprietary naive modeling. Any integer greater
than 1 to use a simple moving average with the value controlling number of
historical periods used.

IntermitCriterion Specifies the lowest percentage of zero values in historical demand for
which the time series will be evaluated using intermittent forecasting
methods.

TooFew * Specifies the minimum amount of data for which the time series will be
considered forecast feasible. Cannot equal zero.

WriteFit ** Specifies whether the engine only writes a forecast for future dates or write
both the fit and the forecast.

* The Forecasting Methods cannot work properly with less than 2 data points, therefore it is best to set this
parameter to a value higher than 2 data points (2 or above in Daily Forecasting aggregation, 14 or above to
Weekly Forecasting aggregation, 62 or above to a Monthly Forecasting aggregation).

** Writing back Fit imposes an I/O load on the engine run, and is not recommended. Since the engine is
oriented to produce the best Forecast, and not necessarily the best Fit, best practice advises on setting this
parameter to 0.

Outlier and Regime Change PARAMETERS:

Parameter Parameter Description

DetectOutlier Specifies whether the engine should attempt to detect and smooth outliers
in the time series.

DetectRegimeChange Specifies whether the engine should attempt to detect and adjust a change
point in the level or trend. If change point is found, forecast analysis is
performed on the modified time series.

EnableModelValidation Specifies whether the forecasting engine should use all models which
successfully forecasted the time series. Yes will use all models. No will not
use some models who performed substantially worse than others.

MinLengthForDataSmoothing Specifies the minimum amount of points needed before the engine
attempts to detect outliers and regime change.

OutlierSensitivity Specifies the sensitivity of outlier detection. The greater the more liberal the
detection. For common detection, use values less than 2.

OutliersPercent Specifies the maximum number of points which may be removed as

outliers.

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 OutlierStdErr Specifies the sensitivity of extreme outlier detection. The greater this value,
the more liberal the detection. Value of 0 or lower is not permitted.

RegimeSensitivity Specifies the sensitivity of regime change detection. The smaller the value,
the more likely a regime change to be found.

RemoveExtremeOutlier Specifies whether the engine should perform aggressive outlier smoothing.
Enable this feature only if there is a clear cause to remove extreme values.

Quality and Validation PARAMETERS:

Parameter Parameter Description

EnableFitValidation Specifies whether to enable statistical fit validation. Yes to enable

validation. No to disable validation.

EnableForecastValidation Specifies whether to enable statistical forecast validation. Yes to enable

validation. No to disable validation.

FitTestPeriod Specifies the length in days of history used for fit validation.

FitValidationSensitivity Controls the sensitivity of fit validation. Forecast methods with MAPE
greater then the specified value are rejected. The smaller the value the
stricter is the validation. For loose validation use values between 1 and 2.
For strict validation choose values between .3 and .5.

ForecastTestPeriod Specifies the length in days of forecast horizon used for forecast validation.

ForecastValidationSensitivity Specifies the sensitivity of forecast validation. The smaller the value, the
stricter the test. For loose forecast validation use values between 5 and 10.

MetricsPeriod Controls whether engine metrics MAPE, MAD, and Bias are generated as
part of forecast run. Parameters values are numbers. 0 will not generate
the metrics. Values of 1 or greater will generate the metrics and use the
value to determine the number of recent time periods used in the
calculation.

ModelValidationSensitivity Specifies the sensitivity of discarding less successful models for a given
time series. This parameter is used only if model outlier detection is
enabled.

RemoveResidOutlier Specifies the percent of residuals that will be ignored for fit validation.
Recommended values are between 0 and 15, and values cannot exceed
50.

StdRatio Specifies the maximum ratio of the standard deviations allowed in fit
validation test. The validation is performed on two parts of the residual
series.

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 ACCESSING THE PARAMETERS DIRECTLY

The User interface allows the configuration of some engine parameters directly using the “Parameters
overrides” setting at the Demand -> Advanced Options screen.

This option is used, mainly, for debugging purposes of the Development team when troubleshooting an issue.

One can define more than one parameter through this setting, making sure that parameters are separated by a
# sign.

The syntax for using this option is <PARAM>=<VALUE>#<PARAM>=<VALUE>…

Important to note, parameter name might differ from the parameter used in Engine and parameter displayed in
UI, therefore parameter override should be done only under support/Dev supervision.

Example :

“REFRESH=TRUE” setting Force a full Engine run (Ignore NET change) even when the snapshot is not opted
for a full refresh, by default Engine will work in NET change mode, thus a subsequent run without snapshot
refresh and no changes in data will return success but will have actually do nothing.

CONCLUSION

This document provided information about the Forecasting parameters of the DM analytical engine, it illustrated
the parameters and how to configure them.

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