Data & drivers

Hierarchical forecasting

Hierarchical forecasting predicts at more than one grain — SKU, category, chain — and reconciles so the pieces add up. It is how you keep a detailed plan that still matches the number finance already believed.

Bottom-up respects the noisy leaves and can look wild at the top. Top-down is stable and unfair to the SKUs. Reconciliation (MinT and friends) is the compromise: forecast all levels, then project onto a coherent set.

You need a hierarchy that matches how people buy and report. A pretty product tree that ops does not use will reconcile into a fiction.

Cold starts often live in a hierarchy: the child shrinks toward the parent until it has a spine of its own.