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WHAT’S the forecast? ...
smaller the lead time, the more quickly the company can adjust
to an error, and the larger the error it can tolerate. ... For products
such as perishables or fashion products, or products that have
no value after a set time—airline seats, for example—the cost of
an error can be high. ...
Remember that a forecast equals pattern plus error. ...
In forecasting, then, it’s not a matter of how sophisticated a
model is, but how well a given model captures the underlying
data. ... It’s best to start with
such a model and then proceed to more complex models until
your forecasting need is satisfied. ... There is a magic model—
it’s just a matter of finding it. ... Since each
model captures a certain data pattern, and each data set has a
certain data pattern, it’s a matter of matching the right model
with the right data set. ... They use it not because
it’s the right model but because they feel most comfortable
with it. ... Once the best model is
discovered, it will work all the time. ... The relationships of certain variables can also
change with time. ... This doesn’t mean, however, that we should throw
out a model if it doesn’t work at a given time. Keep in mind
that a model is selected on the basis of average performance—
it’s the model that has the highest probability of success. ... Over time, of course, if a model consistently
performs poorly, it should be discarded. ... A well-trained forecaster can
prepare a forecast without anyone’s help. ... They know
better than anyone what’s selling, what’s not, and why; they
know what the competition is doing in the marketplace; and
they know their customers’ plans. ...
All these players have an effect on the forecast. ... For example, forecast
accuracy can be greatly enhanced if a customer regularly
provides information about their sales and inventories, as well
as their advertising plan—that is, when they plan to advertise
your products in their materials. ...
FORECASTING IS NEITHER A science nor an art—it’s a
combination of both.
Approximate Word count = 1718
Approximate Pages = 6.9
(250 words per page double spaced)
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