Answers To Your Forecasting Questions

answers to your forecasting questions q. I work in business forecasting. I want to know what kinds of models are used in different industries for forecasting. Vamshi Krishna—Visual Beam a. Models used vary from industry to industry. By and large, among three types of models—Time Series, Cause-and- Effect, and Judgmental—Times Series models are used 61% of the time. q. I have a question about forecast accuracy and its impact on inventory. Is there a rule of thumb to determine the impact an increase in forecast accuracy has on inventory? For example, would a 1% increase in forecast accuracy reduce inventory by this amount? Dean Uva—Bayer Consumer Care a. I am not aware of any rule of thumb as to the relationship between forecast accuracy and inventory. It will vary from company to company depending on the lead time and customer service. The longer the lead time, the more inventories will be maintained. The same is true with customer service—the higher the customer service, the more inventories will be needed. q. I have a question regarding the article that was published in JBF’s Winter ‘06’ 07 edition. When referring to forecast errors for new products, what were the ...