Demand Forecasts. The three principles of all forecasting techniques: Forecasting is always wrong Every forecast should include an estimate of error The longer the forecast horizon the worst is the forecast Aggregate forecasts are more accurate. Two comments frequently made by managers.
Observed demand (O) =
Systematic component (S) + Random component (R)
Level (current deseasonalized demand)
Trend (growth or decline in demand)
Seasonality (predictable seasonal fluctuation)
Forecast demand for the
next four quarters.