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Minimizing Sales Forecast Error using EWMA

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  • #27266

    John Noguera
    Participant

    Has anyone had success in significantly reducing sales forecast error using the Exponentially Weighted Moving Average (EWMA) as a prediction/adjustment tool?

    I am familiar with the Process industry success stories, but was wondering about this and other transactional applications.

    P.S. An assumption here is that we are collecting “high hanging fruit”, the “low hanging fruit” has been collected through the basic tools.

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    #66586

    Andy Gliniak
    Participant

    Don’t assume a forecast is necessary.
    The best to strive for is not to forecast.
    Forecasts are always wrong.

    There are a number of potential process changes that can result in a forecast not being necessary. For one,
    locating distribution at the client so that their actual material usage is your sale. A tranfer of ownership. Another might be to make your production time and delivery time so short and responsive that you don’t need ready inventory and certainly not a forecast, for the variation of customers orders at this time would not be made any more accurate with a forecast. Cheers

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