What is the best way to measure forecast accuracy?

The most effective method to measure forecast accuracy is by comparing actual sales with forecasted sales. This approach directly evaluates how closely the forecasts match real-world outcomes, providing quantitative data that reflects the accuracy of the predictions made.

By analyzing the differences between forecasted and actual sales figures, businesses can identify trends, patterns, or discrepancies in their forecasting methods. This process allows for adjustments to be made to improve the accuracy of future forecasts, thereby aiding in better planning, resource allocation, and overall operational efficiency.

In contrast, customer satisfaction surveys, inventory turnover rates, and employee performance evaluations do not provide a direct measurement of forecast accuracy. While these metrics are important for other aspects of business performance, they do not correlate specifically to how well sales forecasts predict actual sales outcomes.