Measuring Forecast Accuracy in a Pharmacy

Read this article where forecasting approaches, along with a hybrid forecasting method are covered. What types of data can a company use in quantitative forecasts?

Literature Review

Forecasting Method

Forecasting is the art and science of predicting future events. It may involve taking historical data and projecting them into the future with some sort of mathematical model. Adedayo, Ojo and Obamiro posited that forecasting involves the use of historical data, past experience, intuition, personal values and opinion to project future event. It is pertinent to mention that scientific forecasts are possible only when a historical data are available to project the future occurrence. Literature indicates that studies of structured forecasting techniques has been undertaken to improve on demand forecasts accuracy. Using Structured forecasting techniques refers to the use of quantitative (such as moving average, weighted moving exponential smoothing and regression) and/or qualitative approaches (such as the Delphi method, consumer representative method and panel of experts), rather than naïve methods, to elaborate sales forecasts. Quantitative techniques use specified and systematic procedures, whereas qualitative techniques involve aspects such as intuition, personal judgment, and experiences. Despite the plethora of studies on this issue, debate is still open on whether the adoption of structured forecasting techniques is always beneficial in improving forecast accuracy. In particular, during the last decade, several authors have challenged the assumption that: the greater the adoption of complex forecasting techniques – the better the forecast accuracy. For instance, many authors attempted to demonstrate that the efficacy of forecasting techniques in improving forecast accuracy depends on the fit between the type of technique adopted and the context. Moreover, several researchers suggested that complex forecasting technique adoption is not enough to guarantee good forecast accuracy.