Frequently to Forecast:

There is no easy answer to this question. There are two types of situation - one in which forecasts are prepared on some periodic basis, and second in which forecasts are prepared whenever some new historical data are available. With periodic system, a balance must be made among the benefits of a new forecast and the cost of obtaining it. It is often of little benefit to update a forecast just because new data are available, especially when the new forecasts may be expensive to obtain. Many a time forecasts for monthly planning made quarterly, half yearly, or even yearly are satisfactory. The use of ABC (item-volume) analysis may be useful in finding how frequently to forecast (Frequently for A items, less frequently for C items).