Decision Support Oriented Sales Forecasting Methods

Conclusions are drawn regarding evaluation criteria for alternative sales forecasting methods within a planning context and also regarding the position of the forecasting function within an organisation.

Abstract

Forecast accuracy is not always a good criterion by which to evaluate alternative sales forecasting methods. Accurate forecasts do not always lead to desirable management policies. The paper gives two examples of this in practice, one in which short term sales forecasts are used for operational planning purposes, and the other in which long term sales forecasts are used for strategic company planning. In each case the most accurate forecasts do not give the best plans and alternative criteria to accuracy are proposed and shown to perform better. Conclusions are drawn regarding evaluation criteria for alternative sales forecasting methods within a planning context and also regarding the position of the forecasting function within an organisation.