Compare different forecasts obtained by different
techniques?
Different forecasting techniques yield varying results due to their underlying assumptions, data
requirements, and focus areas. In the context of A-CAT Corp., several methods were considered
for forecasting demand for voltage regulators, each with distinct characteristics and
implications [1] [2] [3] .
Comparison of Forecasting Techniques
Example/Context at
Technique Basis/Approach Advantages Disadvantages
A-CAT
Expert opinions, Useful with limited Used when
Qualitative Subjective; prone
market intuition, data; incorporates historical data is
Forecasting to bias
sales team input market changes insufficient [3]
Objective; data-
Historical sales Less responsive Time series
Quantitative driven; good for
data, statistical to sudden market analysis, moving
Forecasting established
models shifts averages [2] [3]
products
Recent sales Reflects actual Ignores external
Sales-Driven A-CAT’s traditional
figures, seasonal market behavior; shocks; may miss
Forecasts method [1] [3]
trends actionable new trends
Prevents
Production- Production May overlook
overcommitment; Useful for inventory
Driven capacity, resource market demand
aligns with internal planning [3]
Forecasts availability changes
limits
Anticipated Risk of
Streamlines
Push System demand, pre- over/under- A-CAT’s inventory
production, reduces
Forecasts emptive stocking due to challenge [1] [3]
stockouts
production forecast errors
Time Smooths out Lags behind Can be applied to
Averages past
Series/Moving fluctuations; easy to trends; ignores A-CAT’s monthly
sales over a period
Average implement sudden changes sales data [2]
Weighted average Adapts to recent May still lag with Suitable for A-
Exponential
emphasizing changes; simple to abrupt market CAT’s volatile
Smoothing
recent data compute shifts sales [2]
Adjusts forecasts Requires enough Relevant for A-CAT
Seasonal Improves accuracy
for predictable data to identify if sales show
Adjustments in cyclical industries
seasonal patterns seasonality seasonality [2]
Key Observations from A-CAT’s Experience
Traditional Approach: A-CAT’s usual method involved averaging sales from the last two to
three months and the same months in previous years to estimate demand for transformers.
While this approach was “manageable,” it led to frequent under- or over-stocking, indicating
limitations in accuracy and responsiveness to market changes [1] .
Quantitative Techniques: Methods like moving averages and exponential smoothing can
provide more systematic and responsive forecasts, especially when sales data is volatile or
shows trends and seasonality [2] .
Qualitative Inputs: Incorporating feedback from sales teams or market experts can help
adjust forecasts for new product introductions or sudden market shifts, which purely
quantitative methods may miss [3] .
Production-Driven Forecasts: These focus on what the company can realistically produce,
helping to avoid overpromising, but may not respond quickly to changes in demand [3] .
Conclusion
Different forecasting techniques serve different purposes and have unique strengths and
weaknesses. Combining methods—using quantitative models for baseline forecasts and
qualitative insights for adjustments—often leads to the most reliable results in dynamic
environments like A-CAT’s [1] [2] [3] .
⁂
1. A-CAT-Corp.-Forecasting.pdf
2. https://www.scribd.com/document/421097063/A-CAT-CORP
3. https://www.netsuite.com/portal/resource/articles/accounting/manufacturing-forecasting.shtml
