Short-term forecasting

Short-term forecasting is employed to fine tune an existing plan based on the new information obtained. The forecasting acts as an input to tactical decisions that an organization makes.

The short-term forecasting is concerned with the short time period usually less than one year. This is required for current production scheduling, purchases of raw material and inventory of stocks, etc.

The seasonality of sales and its impact on production planning, stocks, distribution of products in markets etc, will be taken care of by the short-term demand forecasting.

The forecasting data is used in a disaggregated fashion and analyzed in detail. For example, the sales data will be analyzed by region and product variety for possible short-term impact in a particular region or a variant of a product. Time-series analysis is used most often for short-term forecasting.

When historical data are not available managers use judgment methods for short-term forecasts during the product launch stage. Decisions regarding production, transportation scheduling, procurement and inventory management involve short-term forecasting.

The main limitation in short-term forecasting is the appearance of an unexpected event, such as a weather disaster or an unplanned shutdown.
Short-term forecasting