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:

  1. Obtain or update historical sales (in units) of the item.
  2. 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.
  3. Apply a statistical method to the historical sales to obtain a forecast.
  4. 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.
  5. Review and publish the final unconstrained forecast ...

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