Why must historical sales records be scrubbed of anomalies?
Answer
Unadjusted outliers will corrupt the model’s understanding of 'normal' demand.
Historical data must be scrubbed of anomalies, such as those caused by one-time contracts or stock-out events, because these outliers will otherwise corrupt the model's understanding of what constitutes 'normal' demand.
#Videos
Mastering Demand Forecasting : The 8 Essential Steps - YouTube
Related Questions
What is the fundamental purpose of demand forecasting?What is the initial step before applying any forecasting equation?Why must historical sales records be scrubbed of anomalies?Into which two broad categories do demand forecasting methods generally fall?How does the Delphi Method gather expert opinions for a forecast?What differentiates Time Series Analysis from Causal Methods in quantitative modeling?Which three primary patterns does Time Series Analysis seek to identify in past demand data?What is the key characteristic of Exponential Smoothing as a forecasting technique?What is the integration of statistical probability with business reality during Step Four often called?How is uncertainty quantified in forecasting when moving beyond a single-point estimate?If a Forecast Bias Tracker shows a consistently positive number, what does that indicate?What is a common pitfall regarding technology in demand forecasting?