IBP- using Gross sales or net sales to do forecasting ?

[mostafa_baddar]

Hello IBP-Experts,

I want your expert opinion, which is best to get a higher statestical forecast accuracy to use historical gross sales (net sales+returns) to forecast future values or to use historical net sales data?

appreciate your valuable insights .

Kindest regards,

Mostafa

[sangeet_dadwal]

Hi Mostafa,

You should consider gross sales and if possible orders that were turned down to due to various reasons such as lack of capacity, credit check failure etc. in order to get true picture of demand. You forecast your demand and not sales to get true picture of your organization's product demand.

Forecast accuracy is a function of using the best forecasting model which closely simulates your organizational demand. If the forecasting model chosen is close depiction of your demand, the error component of demand forecast would be low.

[mostafa_baddar]

Hello Sangeet ,

thank you so much for your advise , I understand we need to consider all sourses of demand I want to discuss the point of if we consider Gross sales to generate forecast , it means we plan a head for the returns which we desire to reduce or eleminate or may be it happened for a reason is not going to be repeated in the future with sale intense .. how you see it ?

kindest regards,

Mostafa Baddar