The OIS forecast is updated when a new forecast is required. There are two OIS scenarios that require a new forecast:

1. Model-based: Quarterly variance analysis of OIS’s response functions,

1. • 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 forecasted demand is the same as the actual demand, lagged by three months.

2. Judgment-based: As OIS model’s assumptions change:
   • The changes to these assumptions can happen any time. Since it’s a model, these changes can be made to OIS whenever they occur and with little effort. These changes typically occur when something happens that requires a new forecast. For example:

1. • a 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

The updates are made and OIS computes a new most profitable forecast including all the income statement’s resources required to make and fulfill the new forecast.