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Time series and forecasting · insight-0209

Compute WAPE at the level where actuals cannot sum to zero

Evidence type
practitioner heuristic
Difficulty
easy
Roles
Data analyst, Data scientist
Industries
retail, aviation, logistics

Summary: situation, action, reason, boundary

  1. Situation

    WAPE is reported for every store-SKU-week cell and many cells are blank or infinite.

  2. Action

    Compute WAPE at the aggregation the business manages (category-week, route-month), report undefined slices as a count with their absolute error, and never average cell-level WAPE values.

  3. Reason

    WAPE is a volume-weighted ratio; it is well behaved only when the denominator is large and positive.

  4. Boundary

    Retail and supply-chain reporting, airline route dashboards, any sparse panel.

Symptom or risk

WAPE divides total absolute error by total actuals, so any slice whose actuals sum to zero is undefined, and tiny slices produce extreme values that alarm stakeholders.

Exceptions

If every slice has substantial volume, cell-level WAPE is fine.

Trade-offs

Aggregating hides poor accuracy on small items; pair it with an item-level absolute error table.

Pitfalls

Treating 'WAPE is undefined' as 'error is zero' in a dashboard.

Example

Hypothetical: a route-week with zero actual passengers due to a cancelled schedule and two forecast passengers has undefined WAPE but an absolute error of 2.

Lessons and concepts