Tracking Signal Calculator (Forecast Bias, RSFE & MAD)
Check a demand forecast for bias: running sum of forecast errors (RSFE), mean absolute deviation (MAD), tracking signal by period and whether it stays inside your ±MAD control limits.
How it works
Error eₜ = Actualₜ − Forecastₜ · RSFE = Σeₜ · MAD = Σ|eₜ| ÷ n · Tracking signal = RSFE ÷ MAD · In control if |TS| ≤ limit (commonly 4)
The tracking signal, introduced by R. G. Brown for inventory forecasting, tells you whether forecast errors keep falling on the same side. Random errors cancel out and keep the running sum (RSFE) near zero; a forecast that is consistently too low or too high makes RSFE grow relative to the average error size (MAD). Operations-management textbooks such as Heizer and Render flag a forecast for review when the tracking signal leaves about ±4 MADs. A positive signal means demand is running above forecast.
Worked example
Actual demand of 120, 135, 128, 140, 152 and 149 against forecasts of 125, 130, 130, 135, 140 and 145 gives errors of −5, 5, −2, 5, 12 and 4. RSFE = 19 and MAD = 33 ÷ 6 = 5.50, so the tracking signal is 19 ÷ 5.5 = 3.45 — inside the ±4 limit but drifting upward, a sign of under-forecasting. The mean error (bias) is 3.17 and MAPE is 3.93%.
Sources: Tracking signal — definition and limits · NIST/SEMATECH e-Handbook — Exponential smoothing and forecast monitoring
Frequently asked questions
How do you calculate a tracking signal?
Add up the forecast errors (actual − forecast) to get RSFE, divide the sum of their absolute values by the number of periods to get MAD, then divide RSFE by MAD. RSFE 19 ÷ MAD 5.5 = 3.45.
What tracking signal limits should I use?
Most textbooks use ±4 MADs. High-value items are sometimes monitored at ±3 so problems surface sooner, and low-value items at ±6 or more to avoid false alarms.
What does a positive tracking signal mean?
With error defined as actual − forecast, a positive signal means actual demand has been running above the forecast — the forecast is biased low. A negative signal means the forecast is too high.
What is the difference between tracking signal and MAPE?
MAPE measures how large the errors are on average, regardless of direction. The tracking signal measures bias — whether errors consistently go one way. A forecast can have a low MAPE and still be biased.
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This calculator is for educational purposes. Double-check important results before acting on them.