Accuracy & evaluation

Prediction interval

A prediction interval is a range a new observation is expected to fall in. It is not a confidence interval around a mean, and it is not a guarantee. p10–p90 is a planning band, not a promise.

The center line is one story. The band is the one warehouse lives on. p90 stock for a promo, p10 if you are clearing space. Pretending the future is a single number is how you get heroic PowerPoints and tired stores.

Bands should widen as the horizon grows. A skinny interval at week 12 is usually a model that has not been told it can be wrong.

Calibration is the adult check: about 80% of actuals should land in an 80% interval. If 99% do, you are too wide. If 40% do, you are swaggering.