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Thursday, January 12, 2006

Forecasting 101

Perhaps you are visionary. The simple way to evaluate your forecast accuracy is the employee schedule. How often are you asking people to work overtime or to leave early? If this is a daily occurrence, you need a better schedule which requires more work in the forecast department.

If you have little or no statistical analysis background, you can still become a great forecaster. You need to keep score. Document each week's forecast and save these in a folder or a spreadsheet. Keep track of the important factors. Maybe the weather is key. Day of week is most important. Any special events in your locale with a big impact on business should be noted. Advertising changes are extremely important.

You need a forecast of covers by meal period. This information should be compared to actual counts. Calculate the difference in count and as a percentage of actual.

The next step involves analyzing variances. Highlight very low variances and very high variances. You want to improve the overall performance. Identify weaknesses and make adjustments in future forecasts. Try to imitate accurate forecasts. Find out what you did right on low variance predictions.

Building stronger forecasts is a game of keeping score and improving your gut feel with a reality check. As your numbers improve, you will be tempted to stop the documentation process. Don't stop! Life is dynamic. Look for new patterns.

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