Forecasting, is projecting future demands of our products, on the basis of historical data. A tacit assumption is that to some extent, the historical data would tend to be replicated or somehow be repeated. If it is not really so, because the demand is not replicable, then the data for each period must undergo some corrective adjustments, prior to its use in the demand forecasting model. The rest of the computations will then be mechanically done through computer softwares and mathematical formulas. Please don’t just plug into your model the historical data. You must understand the characteristics of your demand data first.
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The author of this article is a licensed mechanical engineer in the Philippines, and a Masters degree holder in business management, major in Finance. He is a Doctoral candidate in business administration (DBA) at De La Salle University, Manila