The OIS forecast is updated when a new forecast is required. There are three OIS scenarios that require a new forecast:
- Quarterly: Update required to some of OIS’s response functions after quarterly variance analysis
At the end of each quarter, an analysis is made of the demand OIS had forecasted for that quarter with that quarter’s actual demand. For those differences deemed significant, the associated response functions are updated. OIS then computes a new most profitable forecast for the next 12 months including all the associated income statement’s resources required to make and fulfill the new forecast.
Thus, OIS’s forecast-ed demand for the next quarter is the same as the actual demand, lagged by three months.
- Quarterly: A judgement-based forecast for the fourth quarter is added to the current judgement based forecast to ensure OIS’s forecast is a rolling forecast
- Any time: The judgment-based forecast is updated any time key OIS’s model’s assumptions change. For example:
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- new product’s shipment date slips
- Economic conditions change
- Competitive assumptions change
- New production equipment doesn’t perform as well as was projected
- Facilities are damaged by fire, weather, etc.
- Production equipment breaks down