Top-down versus bottom-up forecasting strategies

Abstract

Some controversy exists about the advocacy of top-down versus bottom-up forecasting strategies. Top-down forecasting refers to the process of forecasting the demand for the aggregate of items in a class and then inferring individual demands according to a percentage of the total; bottom-up refers to separately forecasting the requirements for each individual item. This paper outlines the relative advantages of each strategy and indicates the situations in which each should be preferred.