Why is Mean Percent Error not useful?
Mean percent error uses a simple average of computed forecast errors. The problem with this measure is that it may weight low volume items disproportionately. You may have a high forecast error on items that only are shipped a few units each month. Typically items with such spotty volumes are the hardest ones to forecast. Such items should be dealt with using an alternative supply chain strategy instead of focusing on their demand forecast accuracy. Hence Mean Percent Error could create incorrect incentives.
