By: Kevin Ertell, VP Retail Strategy, ForeSee ResultsLuckily, there’s a better way. Monte Carlo simulations run in Excel can transform our limited data sets into statistically valid probability models that give us a much more accurate view into the future. And I’ve created a model you can download and use for yourself.
There are literally millions of variables involved in our weekly sales, and we clearly can’t manage them all. We focus on the few significant variables we can affect as if they are 100% responsible for sales, but they’re not and they are also not 100% reliable.
Monte Carlo simulations can help us emulate real world combinations of variables, and they can give us reliable probabilities of the results of combinations.
For some background on our current processes, a simplified explanation of how most retailers develop sales forecasts and to view the full blog post, visit: http://bit.ly/4EJ33t
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