Forecasting Consumer Product Demand With Weather Information: A Case Study

FORECASTING CONSUMER PRODUCT DEMAND WITH WEATHER INFORMATION: A CASE STUDY By Joel K. Sivillo and David P. Reilly Describes how one can incorporate weather information into a forecasting model to improve the accuracy of demand forecasts …it is preferable to use weather forecasts which are objectively (not subjectively) derived … explains the findings of a study of consumer products company where weather information was used to forecast demand. Weather plays a major role in our day-to-day life. It is an important factor in planning our leisure and making our purchasing plans. Most product demand patterns have a logical dependence on weather. Therefore, it is important to assess the significance of weather on demand. If it does have an impact, we have to include it in the forecasting model. In this article, we report the results of a study of daily consumer product demand forecasts where weather was incorporated into the model. WHY WEATHER FOR DEMAND FORECASTS Why blame weather when you can plan for it? Many corporations cite weather as a reason when earnings estimates are not met. While this seems to be a logical and acceptable explanation to some investors and analysts, ...