The cost of sales forecasting errors
Tuesday, 25 Mar, 2008Forecast accuracy can play a central role in increasing shareholder value, particularly when the enterprise is reliant on long-fulfillment lead-times. However, forecast error metrics, such as the Mean Absolute Error (MAE) and Mean Absolute Percentage Error (MAPE), do not reveal the financial impact of forecast error.
Dr Peter Catt from Soltius completed his doctorate on sales forecasting and has written a white paper based on his journal-published article looking at new, more accurate, forecasting methods. The formula developed by Dr Catt is the first to make economic trade-offs explicit, helping a business understand the implications for adjustments they make to service and safety stock levels.
Download the full white paper The cost of sales forecasting errors as a pdf (211KB)
