How Precisely to Forecast?:

A easy answer is: It depends on the value of the product. For a high-value product, such as an aeroplane or a railway coach, it is fairly important to be precise in demand forecasts; however, for nails, screws, or washers demand, precision cannot be too important (unless of course, the complete business is distribution of nails, screws, or washers). Tools, such as ABC (item-volume) analysis may guide in determining how precisely to forecast. Use sophisticated methods to have precise forecast for A items whereas use easy & simple methods for C items.