S&OP, Demand Planning & Forecasting worked example

Forecast Error Cost at 43% share driving real cost: a worked example

Suppose share driving real cost falls to 43%. This page works the full calculation at that level so you can see exactly which result moves and by how much. Estimates the financial cost of demand forecast error by combining per-unit penalties with fixed replanning overhead.

The inputs for this scenario

  • Mis-forecasted units: 5,000 units (held at the documented default)
  • Penalty cost per unit: 4 $/unit (held at the documented default)
  • Share driving real cost: 43 % (the input this scenario stresses; the baseline uses 60)
  • Replanning and expedite overhead: 7,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Total forecast error cost = mis-forecasted units x penalty per unit x cost-driving share + replanning overhead.
  • Total forecast error cost works out to 15,600 $ at these inputs, and this is the headline figure for the scenario.
  • Forecast error cost per unit works out to 3.12 $ / piece at these inputs.
  • Variable forecast error cost works out to 8,600 $ at these inputs.
  • Fixed forecast error cost adder works out to 7,000 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where share driving real cost sits at 60% and the headline result is 19,000 $, this scenario comes in 17.89% below the baseline at 15,600 $.
  • It multiplies mis-forecasted units by the per-unit penalty and the cost-driving share, then adds fixed replanning overhead to give total and per-unit forecast error cost. When the numbers land here, the stressed input is the lever to work; the walkthrough above shows exactly how much each output recovers as it climbs back toward the baseline.

Results at a glance

  • Total forecast error cost: 15,600 $ (headline result)
  • Forecast error cost per unit: 3.12 $ / piece
  • Variable forecast error cost: 8,600 $
  • Fixed forecast error cost adder: 7,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Forecast Error Cost calculator, set share driving real cost to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.