Forecasting 2: An Example of Simple Forecasting for Security

The National Express Corporation (NexCo) is a package delivery company, and it’s losses have been fairly stable for the past four years. Losses are recorded as records in the Corporate Loss Prevention Case Management System (CMS). It is now the end of the fiscal year (June thru May) and Raymond Cole has been requested by management to do a loss forecast for June. Ray has records going back for five years in the CMS, and can easily query the losses from his database. Ray believes that NexCo’s loss environment (due to employee turnover) has changed substantially over the years, and losses from years ago have little or no effect on June’s losses, and so focuses only on losses for the previous fiscal year. May’s losses, however, seem rather erratic compared to previous losses, and Ray feels he should use Excel to prepare a better forecast. He decides to use the previous year’s losses to prepare the spreadsheet model.

To be continued...