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Configure Forecast Models

Overview

Forecast models in GoldFinch are used to calculate forecast quantities for future periods based on historical actual sales data. You can define multiple forecast models, and the Daily Calculations Routines will select the most accurate forecast model with the least errors as the best-fit model for each SKU. The Calculate Forecast routine then uses this best-fit model to project future forecasts.

Best Practices for Forecast Models

  • Deactivate or Delete Forecast Models with Large Errors: Periodically review forecast models and deactivate or delete those with large forecasting errors.

  • Clone and Tweak Accurate Models: Forecast models with small errors can be cloned and tweaked, then added back to the active models list.

  • Try Multiple Models: Since GoldFinch selects the best-fit formula based on accuracy, testing several forecast models is essential to finding the most accurate one for each SKU.

Forecast Model Fields

Field Label

Field Help

Active

Only active forecast models will be used in the forecasting process.

Calculate First Period Forecast Only

If checked, the forecast quantity for the first future period will be calculated using the best-fit forecast model.  The forecast quantity for other future periods will be copied from the first period. 

If not checked, the forecast quantity for all future periods will be calculated using the best fit forecast model. 

Forecast Model Line Fields

Field Label

Field Help

Adjustment %

Actual sales quantity can be adjusted for the forecast calculation.

Forecast Model

Links to the specific forecast model.

Include In Trend

If checked, the period's actual sales quantity will be included when calculating the growth trend percentage.

Period

The look-back period number (e.g., enter "1" to look back one period before the current period, "2" for two periods back, etc.).

Seasonal Trend

Specifies the period as Blank, Current Season, or Prior Season. Periods assigned to Current or Prior Season are used to calculate the seasonal growth percentage.

Weight

The weight assigned to the period when calculating a weighted average.

Sample Forecast Models

3 Months Moving Average

Period

Adjust %

Weight

Included in Trend

Seasonal Trend

1

3

No

2

2

No

3

1

No


6 Months Moving Average with Trend

Period

Adjust %

Weight

Included in Trend

Seasonal Trend

1

3

Yes

2

2.5

Yes

3

2

Yes

4

1.5

Yes

5

1

Yes

6

0.5

Yes


Simple 5% Growth Based on Last Year

Period

Adjust %

Weight

Included in Trend

Seasonal Trend

13

5%


3 Months Moving Average with Seasonal Trend

Period

Adjust %

Weight

Included in Trend

Seasonal Trend

1

1

Yes

Current Season

2

1

Yes

Current Season

3

1

Yes

Current Season

13

Prior Season

14

Prior Season

15

Prior Season

Forecast Calculation Example

Forecast Model:

  • 3 Months Moving Average with 5% Adjustment, Trend, and Seasonal Analysis.

Period

Adjust %

Weight

Included in Trend

Seasonal Trend

1

5%

3

yes

Current Season

2

5%

2

yes

Current Season

3

5%

1

yes

Current Season

13

Prior Season

14

Prior Season

15

Prior Season

Scenario:

  • Today's Date: 3/25/20

  • Inventory Period Type: By Month

  • Current Period Date: 3/1/20

Actual sales for prior periods:

Period

Period Starting Date

Actual

1

2/1/20

10

2

1/1/20

20

3

12/1/20

30

13

2/1/19

10

14

1/1/19

11

15

12/1/18

12

Forecast Model Calculation Template 032520.xlsx

Steps to Calculate Forecast Quantity

  1. Calculate Adjusted Quantity for each period:

    • Period 1: 10 + 5% = 10.5

    • Period 2: 20 + 5% = 21

    • Period 3: 30 + 5% = 31.5

  2. Calculate Weighted Average:

    1. (31.5+42+31.5)/(3+2+1) = 17.5

  3. Calculate Average Trend:

    1. (-0.5+0.33)/2 = 17%

    2. The maximum growth trend is 200% per period

  4. Calculate Forecast Quantity with Trend %:

    1. 17.5 x (1+17%) = 14.58

  5. Calculate Seasonal Trend

    1. Current Season Total = 10+20+30 = 60

    2. Prior Season Total = 10+11+12 = 33

    3. Seasonal Growth % = (60 - 33) / 33 = 82%

  6. Calculate Forecast Qty. with Season Trend

    1. 14.58 * (1+82%) = 31.82

The final forecast quantity for this period is 31.82.

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