Tracking a signal

1. What is Tracking Signal used for?
2. What is a good Tracking Signal?
3. What is the relevance of bias and Tracking Signal?

What is Tracking Signal used for?

In statistics and management science, a tracking signal monitors any forecasts that have been made in comparison with actuals, and warns when there are unexpected departures of the outcomes from the forecasts. Forecasts can relate to sales, inventory, or anything pertaining to an organization's future demand.

What is a good Tracking Signal?

TS should pass a threshold test to be significant. If Tracking Signal > 3.75 then there is persistent under forecasting. On the other hand, if this is less than -3.75 then, there is persistent over-forecasting. So in essence, |TS| > 3.75 implies a forecast bias ==> TS < -3.75 or TS > 3.75 implies a bias.

What is the relevance of bias and Tracking Signal?

The “Tracking Signal” quantifies “Bias” in a forecast. No product can be planned from a severely biased forecast. Tracking Signal is the gateway test for evaluating forecast accuracy.