Items with deviations exceeding the user established limits of the tracking signal are displayed on an exception report for management review and revision. Every A item is reviewed each month by management. Only those B and C items with a significant deviation between forecast and actual demand need be reviewed by management. The user has the capability to override the statistical forecast based on market knowledge and other non-statistical factors. Forecasts are more accurate for larger groups of items.
Forecasts are also more accurate for longer segments of time periods.
Forecasting the total annual demand for an item yields a more dependable number than forecasting the demand for each month during the year. This is particularly true for lumpy or irregular demand items. Application of the distribution by value analysis technique for separating the important few from the trivial many is a viable approach for tracking the forecast. A items are compared month by month. All items with a deviation greater than a user specified tolerance are reported for management review.