A Simulation of Techniques for Forecasting Shipments Using Firm Orders-to-Date

Many companies use firm orders-to-date to make forecasts of units to be shipped at a future time t that is j periods away, j = 1, 2,..., h. A number of methods for making these forecasts were developed and evaluated using simulation. The time series for bookings was decomposed into a shipment time series and a time series for factors representing the fraction of shipments booked j periods ahead. Separate techniques were used for the shipments series (namely, naive, exponential smoothing and Bayesian procedures) and for the factors (naive and exponential smoothing procedures). The accuracy of these approaches, as well as an ARIMA model that ignored orders-to-date, was evaluated by using several simulated patterns of bookings. No approach was dominant, but one of the simplest approaches (naive/smoothing) did comparatively well.