Weather sensitivity analysis case study

Weather sensitivity analysis

Case Study

Weather sensitivity analysis: Case Study

The company manufactures a range of horticultural products and sells them through various distribution channels including the major DIY outlets and garden centres.

There had been a belief in some parts of the business that sales were affected by weather variations, but this understanding was not shared in all departments.  Indeed some individuals expressed the view that bad weather was used by sales executives as an excuse for poor sales performance.

A project was instigated to determine if weather effects really existed and to quantify them so that they could be of benefit for demand analysis and sales forecasting.  Forecast Solutions was selected to carry out the work.

Historical weather data was sourced in the form of population weighted national data for the UK.  Statistical analysis was carried out in order to examine the influence of weather variation on product group sales.

In view of the inherent seasonal patterns of the markets concerned, the natural seasonality of the weather and the strong interdependence of the weather elements involved, a great deal of care was necessary in the analysis.  Various time lags in the weather data were explored in terms of the explanatory capability and the statistical robustness of the results.
shifts in sales volume or market share. 

Integration of results with the sales forecasting system

Not only was it was established beyond doubt that that weather variations affected the company's sales, but it also proved possible to quantify the relationships for most product groups.  Simple models were developed to explain the percentage change in sales caused by unit deviation from average seasonal weather patterns, with temperature, rainfall and sunshine hours featuring in the models.