Business Problem
The business needs to plan inventory and staffing for upcoming months, but demand fluctuates due to seasonality and trend shifts.
Inaccurate forecasts cause lost sales (stockouts) or wasted cash (overstock).
Goal
- Forecast demand for the next 3–6 months.
- Identify seasonality and trend patterns.
- Translate forecast into inventory planning actions.
Method
- Exploratory analysis of historical sales (trend + seasonality).
- Baseline forecast (moving average / exponential smoothing).
- Compare forecast accuracy using a holdout period.
- Create planning recommendations based on forecast ranges.
Honest note: Forecasts are never perfect. The goal is to be “usefully accurate”
and reduce uncertainty for planning decisions.
Key Insights
- Strong seasonal peaks appear in specific months (high demand periods).
- Some product lines have stable demand; others are volatile and need safety stock.
- Forecast ranges are more useful than single numbers for inventory decisions.
Recommendations
- Increase stock and staffing ahead of peak months.
- Use safety stock for volatile categories to reduce stockouts.
- Track forecast error monthly and update the model regularly.
