Zansa › Answers › Forecasting and data science
How do I do error analysis to improve a forecast?
Break the errors down by product, location, time period, season, promotion status and customer segment to find where the forecast fails most and in which direction. Then look for causes: missing events, bad data, wrong method for that group. Fix the largest, most systematic errors first.
A practical routine:
- Rank items by total absolute error to focus on those that matter.
- Plot actual against forecast and look at the worst periods.
- Check bias by group to find systematic over- or under-forecasting.
- Examine residuals for patterns by weekday, month or event.
- Ask people in the business what happened in the worst weeks.
Often a handful of items or data problems cause most of the error, so targeted fixes beat swapping algorithms.
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