Forecasting Stable Products
Consider the case of forecasting the future demand of a particular stock-keeping unit (SKU) in a particular sales region. The typical steps in the forecasting process are as follows:
- Obtain or update historical sales (in units) of the item.
- Cleanse the historical sales to remove noise due to predictable events—most notably, sales due to promotional events—and to address issues like stock-outs.
- Apply a statistical method to the historical sales to obtain a forecast.
- Review the statistical forecast and adjust based on information not reflected in the historical sales—for example, known new or lost accounts, upcoming promotional events, customer input, and so on.
- Review and publish the final unconstrained forecast ...