METHODOLOGY OF O3 FORECAST

O3 Forecast has the ability to project different demand series by simultaneously using several methods for each product.

Today, the methods which are included in this tool are of two types:

a) Simple Methods

They are a set of simple formulas based on simple extrapolation methods (Focus Forecasting).

b) Econometric Methods

These methods are based on models which "explain" the behavior of the series to be projected. These are handled through one or more parameters which are adjusted so that it is possible to model what happened in the past and according to this project the future.

Besides taking into account historical data of the same variable, the forecast takes into account the realization of marketing strategy which could influence the course of the demand for certain products or a group of these. This is materialized through the incorporation of factors in the models.

CHOOSING THE BEST METHOD

O3 Forecast has the ability to implement all the methods described with all the products included. As the demand for each product has its particular behavior, O3 Forecast decides which is the best method for the projection of each of the products according to the Strategy of Best Fit. It performs a comparison of all methods with the current demand and chooses the method that contains the smallest projection error for the next trimester for each of the products. It also allows the user to choose the method that he considers as the most appropriate, in case he wants to project a different method to the one that was suggested by the tool.

Projection
Having chosen the best method of projection for each of the products according to their behavior in the recent past, O3 Forecast performs the projection of demand in the future. The tool has the possibility of replacing the amount of projected sales for a manual forecast, in the cases in which the reality deserves to do so.

Monitoring and Control
It allows a comparison between what have been projected (based on the method adopted under the Best Fit strategy or by the end user) and the real demand. In this way you can analyze the accuracy of the projection and begin to acquire more information about the demand behavior of the products.

Analysis based on errors calculation
From the projected data to current data, errors calculations are made.

Purchase Plan (Orders made again)
With the execution of the projection, comparing with the current inventory and considering the time taken to carry out orders, it allows you to estimate the time in which orders should be made and their amounts.