How much emphasis is placed on recent sales months in contrast to previous sales history. Forecasts for “High” will react more quickly to recent changes in demand than “Low”.

For businesses with rapidly changing demand patterns, a setting of "high" may be preferred. The forecast will be significantly weighted towards sales over the last 3 months.

A setting of "Low" will give a reasonably flat weighting to sales over the last 12 months. This may work well for businesses with sporadic demand that needs to be assessed over longer timeframes.

For most businesses, it's best to leave this setting as "Medium" which offers a balanced approach.

The setting "High" will place a much greater weighting on the last 3 months of sales, "Medium" will extend the higher weighting out to 6 months and "Low" will offer a flatter weighting across 12 months of history.

Does this mean that a setting of “High”, “Medium” and “Low” applied to the sales history below will result in the following forecasts?

High

Medium

Low

It’s not quite that drastic. The keywords here are “higher weighting”. A setting of “High” still considers all the sales history, it just applies a higher weighting to the more recent sales history.

High

Medium

Low

NOTE: This is in no way the correct formula or calculation. It is merely a thumb-sucked example to illustrate how the different settings may result in different forecasts.

Question: What if I set my Reactivity to be “High” and my forecast shoots through the roof?

Answer: You can limit by how much your forecast grows or declines by utilizing the two settings: Maximum growth (%) and Maximum decline (%).