Predictive Analytics – Optimization – Performance Management

Time Series Forecasting

A simple but efficient and effective method for forecasting Revenue, Expenses and Products is Time Series Forecasting and Simulation. Time Series Forecasting methods use historical data to forecast future performance, there are variety of methods each with a unique algorithm which producing forecast from a ‘simple linear plot’ attempting to bisect historical results and forecast the trend into the future based on this ‘line’, to more complex algorithms capable of identifying seasonality trends and adjusting outliers to forecast what may be a more accurate forecast.

Using Time Series methods, particularly Vanguard Software which support using multiple methods to forecast for example all SKUs, then recommends the best fit method is an efficient approach to forecast Revenue, Expenses and Products. Where insufficient historical data is not available to predict future trends within defined thresholds alternative logic can be automatically applied to automatically create forecasts.

Vanguard Software’s Time Series capabilities allow our client’s to streamline and automate SKU level forecasts by allowing Vanguard to recommend which SKU Forecasts should be reviewed based on ‘poor fit’ or ‘lower confidence scores’. This allows our clients to focus their limited time on analyzing and as appropriate adjust the forecasts with a high probability of being inaccurate. Those SKU’s with ‘good fit’, ‘high confidence’ or are consistently forecasted accurately by Vanguard are typically not analyzed.

Measuring Time Series Forecast Accuracy

The common metrics to assess the accuracy and effectiveness of Time Series forecasts over time is Bias and Forecast Accuracy. Bias is the percentage by which your forecasts are incorrect, Forecast Accuracy is the absolute percent accuracy.

Bias =

Forecast Accuracy =

Bias and Forecast Accuracy Targets are based on the specific operational needs of a company, for example at what Bias Percentage will inaccurate forecasts impact inventory days on hand targets?

The Time Series Forecasting Cycle

To effectively forecast using Time Series methods requires a commitment to the entire Time Series Forecast Cycle;


Time Series Forecast > Measure Accuracy > Adjust Forecast Algorithms > Time Series Forecast


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