Reasons For Failure Of Demand Forecating

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The probable reasons for the failure of the demand forecasting are: 1.The prime reason for the failure of demand forecasting of Tera air cooler manufacturing can be The selection of inaccurate demand forecasting method. Success of demand forecasting is largely depends upon the accuracy of the forecasting model .some methods are low or moderate in cost but at the same time their accuracy level is also low. On the other hand some methods which involves collection of huge amount of data are costly, but at the same time their accuracy level is also high . Tera might have done the mistake of choosing a method with moderate level of efficiency of forecasting. 2.the second possible reason of their failure can be taking INACCURATE HISTORICAL DEMAND DATA as their basis of forecasting. One important criteria of accurate demand forecasting is its input data .if the input data is inaccurate it will Inevitably lead to inaccurate forecasting, irrespective of the level of efficiency of the forecasting model. As tera air cooler takes into consideration only historical demand data the possibility of inaccuracy cannot be ignored. 3.success of any forecasting method depends on the sample size which the organization takes into consideration while forecasting. Thus another reason for failure of this organization can be stated as choosing a wrong sample size and targeting a wrong customer segment for collecting the Demand Data. 4.failure to forecast the right thing. 5.in the case it is stated that Tera Air Cooler was facing the problem of inaccurate forecasting for past three years. But in those three years there was no step taken to improve or modify the forecasting model. So the failure to track the performance of the forecasting models (so that the forecasting accuracy can be improved) can be one of the major reason behind inaccurate

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