If you read the previous section on forecasting algorithms, your head might be starting to throb a little bit. So many algorithms and so many different variations… which one is a poor humble shop owner to choose?
Luckily, you don’t have to!
When skuBrain is preparing forecasts for the items that you sell, one of the things it does is to automatically select an appropriate algorithm by running a forecast tournament.
When running a tournament, skuBrain uses a technique known as back-casting. Basically, it splits your sales history into recent history and less recent history. It then runs a series of algorithms against your less recent history and chooses the one whose forecast most closely matches actual sales (i.e. your recent history).
Note If you don’t have enough sales history to run a tournament then skuBrain will just use single exponential smoothing.