Business planning under uncertainty: will we attain our goal?

Wu, L. S.-Y., Hosking, J. R. M., and Doll, J. M. (1992). Business planning under uncertainty: will we attain our goal? International Journal of Forecasting, 8, 545-557.

Abstract. In business, planning often starts with an annual financial target which is then apportioned into a set of monthly targets, called the track. As the year progresses planners must assess, by comparing the actual measurement with the track, whether the measurement is on track to reach the target or whether action needs to be taken in order to reach the target. L. S.-Y. Wu ["Business planning under uncertainty: quantifying variability", The Statistician, 37 (1988), 141-152] has briefly described three planning charts, called WINEGLASS, SHIPWRECK and OUTLOOK, that enable this assessment to be made objectively. Here we give a detailed description of Wu's approach. We give a complete description of the charts and of the calculations needed to construct them, and we present examples of these calculations. We also describe a way of setting the current year's monthly targets on the basis of previous years' data. The calculations are based on a statistical model, a modification of Wu's Track Uncertainty Model, of the variability of the actual measurement about the track.

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