A manufacturer can simplify the forecasting process by pooling demand forecasts for a product group and then:

Question

Quizplus · Accepted Answer

Disaggregating demand to the item level based on historical proportions is the best choice as it takes into account past sales data for each item within a product group to determine its share of the total demand forecast. This approach is more accurate than simply averaging total demand and spreading it evenly across all items, and it is also more informed than relying solely on marketing input to determine demand for each item. Allocating demand to each production site is not relevant to the forecasting process and is a separate operational decision.

A Manufacturer Can Simplify the Forecasting Process by Pooling Demand