Question

Assume that effective forecasting requires a combination of technique, system support, and administration. Your supervisor in your consumer products firm has requested that you identify some initiatives to enhance forecast accuracy. What specific initiatives would you recommend for consideration regarding the technique, system support and administration components?

Answer 1

An accurate forecast for sales is important element for the companies to have. It basically helps gauging the demand for products. It helps the companies to manage inventory better. It allow the companies to see into future and plan their moves accordingly to increase the growth. It is the degree of closeness of quantity’s actual value and statement of quantity.

Percentage Error also known as Percentage Difference is a simple approach for many forecasters to use for measuring the forecast accuracy. It simply depicts the difference between forecast volume and actual volume which is expressed as percentage. This method is one of the best technique for forecast accuracy for the company, as it’s a reliable and very useful way to measure error in forecast within a period of time.

Generally the forecasts are proceeded by the integrating judgements of the management with quantitative forecasts with a support system, also known as Forecast Support System (FSS). It is a special type of decision support system (DSS) which is designed to help the company to reach forecast accuracy.

The section of administration for forecast accuracy describes the important components needed for the forecast accuracy. It selects the best forecasting level and algorithm to yield most accurate results for the future references. The administration establishes a final level of forecasting horizon, and commencement of forecasting generation, and aggregation levels and methods to yield the results.