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Patio Furniture

What is the right forecasting model?

August 2, 2013 • Featured, How to, Modeling

What should be the right forecasting model for the Retail Furniture industry that has a life span of only six months?

The best way to deal with this kind of product is to use its analog, a similar product that was launched in the past. Then determine intuitively whether this new product will do as well, better, or worse than the analog, and by how much. Once you decide on that, the next step will be to break down the total sales by month using the analog’s percentages, that is, what percentage of sales on the analog came in the first month, in the second month, and so on. After you have sales data of three months or so of a newly launched product, determine whether sales are coming along as projected, or more than or less than what was projected, and then make adjustments in forecasts accordingly.

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