Budget Adjusted Trend Forecast Method

This forecast method creates top-down forecasts as part of the Budget Management module. This method compares the trend of this year’s actuals against this year’s budget. The method forecasts sales and AHR by multiplying a calculated baseline by the calculated trend. A forecast is created for one week at a time. Note: the method forecasts each week in chronological order. The method uses the forecasted data from one week to forecast data for a later week. The method uses the following data:

Data Origin
sales drivers Point-of-sale data daily data in the SO_RESULTS_SUMMARY table from LFSO.
AHR forecasts AHR historical weekly data in SO_RESULTS_SUMMARY that is automatically averaged to weekly values.
budget values An imported reference budget stored in the FCST_ITEM table.

This forecast method uses the Budget Adjusted Trend algorithm to calculate the forecasted values.

This algorithm:

  1. Uses a weighted average of budgeted sales for the current and upcoming weeks to calculate the sales baseline for a specific week.
  2. Uses the ratio of the weighted average of this year’s actual or forecasted sales to the weighted average of this year’s budgeted sales to calculate the sales trend for a specific week.
  3. Multiplies the sales baseline by the sales trend to calculate the forecasted sales.
  4. Uses a weighted average of actual AHR for the current and previous weeks to calculate the AHR baseline for a specific week.
  5. Uses the ratio of the weighted average of this year’s actual or forecasted AHR to the weighted average of this year’s budgeted AHR to calculate the AHR trend for a specific week.
  6. Multiplies the AHR baseline by the AHR trend to calculate the forecasted AHR.

See Budget Adjusted Trend Algorithm.

The application stores the forecasted values in the FCST_ITEM table in the database.