Picking the Right Forecasting Technique Source: Eight Methods that Improve Forecasting Accuracy. Lopdilly, www.ogilily.com. 1876a05-4019-423-438-201302277 p. "Companies routinely rank demand planning immaturity as a major obstacle in meeting the pply chain goals "suggests a new wivie paper caled Eight Methods that improve Forecasting Accuracy. But cute forecasts are the foundation for profitable business growth. Optimal demand planning and forecasting requires comprensive modeling capabilities plus the tably and confuse to shit methods as le cycles progress and market conditions change Attribute-based methods that se demand profiles we often suited to new product modton and end of product keyles of times when reliable historical demand data is lacking or the stable data is rew. At the more mature stages of the product life cycle, oferent time-series statistical models come into play, including modified Holt Hon Winters, moving average, and intent or low demand. These models are used to create retrospect forecasts that cover prior periods Opicaly years of documented demand. The forecasts are the matched to actual demand try to determine which one but to the real world do. The best fit winner is used to create an objective boce forecast Causal methods are used throughout the life cycle to adjust forecasts in anticipation of promotional events. Causal methods slow planners to predict how discounting and other promotional factors wil afect volume, and layer the impact of the events on top of the underlying base forecast Finally derived models can be used to create a went Child relationship in which forecast for domely related products are driven as a percentage of the forecast for a reader product This ensures that when the forecast is nod fedt parent, all the chic forecasts would be updated accordingly To preval in a business economy shaped by uncertain demand and rapid market changes, all of these forecasting methods must be hamessed. Forecasting software an automat much of the selection and switching of methods as a product moves through its le cycle. A best-in-class forecasting system is one of provides flexibility for users to weight elements and override ay parameters in the forecast cation based on the invenowledge and are expertise Critical Thinking Questions 1. Why are accurate forecasts so important? O A They are always quantitve in nature OB Humans cannot make business forecas OC. They are the foundation for business growth OD Forecasting is an exact science 2. The best type of forecasting for introducing a new product is O A. a time series model. OB. using historical data. O c. an attribute-based method. OD. There is no good method. Guesses are all managers can do. 3. Time series models include O A. Holt and Holt-Winters. OB. moving averages. O c. weighted moving averages. OD. All of the above. 4. Forecasting software O A. can automate the use of different methods as a product goes thorough its lifecycle. B. can only be used in new product introduction. O c. is accurate 95% of the time. D. does not allow human input as it is totally automated