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Lessons From Experience: Forecasting With Numbers 1 Introduction The story that you are about to read is from actual events that occurred in the field. Its purpose is to provide you with a real -world example from a seasoned professional in the business world. Forecasting With Numbers Working in the jewelry industry involves forecasting; that is, forecasting which jewelry pieces will be in demand and then determining how many to order. While working at a jewelry company, one of my tasks wa s to place orders for various jewelry products for the store. But for me at that time, forecasting meant looking at last year's orders and then simply copying those numbers. I never gave much thought to why I was ordering what I did; I just did it. As it t urned out, my orders were off the mark —not just by a little bit, but by a lot.

The store got stuck with a surplus of items that eventually went on clearance for less than what we paid for them, all because I didn't use a financial model or take into accoun t external factors that could have affected the jewelry items.

Today, I implement many financial models and include net present value (NPV) so that I have a better understanding about what I'm ordering, and so I can be more accurate in forecasting. It is important to take away the following from this scenario: • Financial models are crucial when forecasting. • Subjectivity and objectivity are equally important.