Use the calculated ratio to make the projection for the next year. For example, specify n equals 4 in the processing option to compare sales history for the most recent four periods to those same four periods of the previous year. This method might be useful in projecting the affect of extending the recent growth rate for a product into the next year while preserving a seasonal pattern that is present in sales history.įorecast specifications: Range of sales history to use in calculating the rate of growth. The Calculated Percent Over Last Year formula multiplies sales data from the previous year by a factor that is calculated by the system, and then it projects that result for the next year. This recommendation is specific to each product and can change from one forecast generation to the next.ģ.2.2.1 Example: Method 2: Calculated Percent Over Last Year The data in this period is used as the basis for recommending which forecasting method to use in making the next forecast projection. This period is called a holdout period or period of best fit.
You can select between two methods to evaluate the current performance of the forecasting methods:īoth of these performance evaluation methods require historical sales data for a period that you specify. You might find that a forecasting method that provides good results at one stage of a product life cycle remains appropriate throughout the entire life cycle. A forecasting method that is appropriate for one product might not be appropriate for another product. 3.1 Forecast Performance Evaluation Criteriaĭepending on the selection of processing options and on trends and patterns in the sales data, some forecasting methods perform better than others for a given historical data set.