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Different methods for forecasting
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The Best Methods for Forecasting Products
575 Words2 Pages
Recommended: Different methods for forecasting
1. What is the best method for forecasting each product?
The best forecasting method for each product depends on many factors – recent and past order and sales of the inventory/product. There are two way to forecast – Quantitative and Qualitative Methods. Qualitative methods, in general are used for new products or when there’s little numerical data to incorporate into a forecast. The process included executive judgments, sales force predictions, surveys and market test. Quantitative methods include Naïve, Moving Average (MA), Exponential Smoothing, Time Series Regression, etc. In general, forecast are more accurate for short-term than longer-term.
Naive Forecast: The simplest time series forecasting model.
Basic Idea is what happened last time (last year, last month, yesterday) will happen again this time.
Moving Average (MA): average of the specific number of periods to plan the next period. One should recalculate it often (monthly or at least quarterly) to reflect changing demand level.
Issues with MA Model:
• Naive model is a special case of MA with n = 1
• Idea is to red...
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