Forecast and Inventory Strategy
Introduction
This paper is focused on coming up with the best forecasting and inventory model for the drive-safe phone which is a new product in the market whose future trends are to be forecasted in a bid to see how it will affect the market and the business at large. Due to the rising complexity and variety of forecasting problems faced by managers, various models have been developed for this purpose. As such, an appropriate model will be fit for the drive-safe phone product.
Since the product is new and has no past or previous values, then the visionary forecasting model, a form of the qualitative model is preferred to other methods including Time series analysis model and exponential smoothing. The visionary forecast model uses personal insights, judgment, as well as facts about the future and the scenarios surrounding the drive safe phone product. However, despite the personal judgments of the forecaster, the ideas to be used in the product should be unbiased as possible to allow for the conversion of the qualitative information into quantitative forecasts and estimates (Cambers et al., 1971). Since the product is a new form of technology which may require subsequent inventions, it is difficult to establish the demand patterns as well as the market acceptance and penetration. Consequently, this method will be coupled with volumetric forecasting which estimates the number of the drive-safe phones that will be bought from the retail stores within the first year. As such, all the inventory build will not be included (Thomas, 2016). After reaching a depletion estimate, all the phones sold will be discounted to attain the actual sales in one year. After this number is achieved, then more effective and detailed forecasting methods like time Series will be employed to estimate the future prices.
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Conclusion
Since the product is new and untested and no past values exist that can be used for forecasting, the visionary forecasting supported by volumetric forecasting are the best methods and techniques for forecasting the products.
References
Chambers, J.C., Mullick, S.K., & Smith, D.D. (1971). How to Choose the Right Forecasting Technique. Harvard Business. Retrieved from: https://hbr.org/1971/07/how-to-choose-the-right-forecasting-technique
Thomas, J.W. (2016). New Product Sales Forecasting. Decision Analyst, 604 Avenue H East. Retrieved from: https://www.decisionanalyst.com/media/downloads/NewProductSalesForecasting.pdf
