Method to Quantify Higher Profits From Better Forecasts

Much is being said about changing processes, reducing changeovers, setup times to reduce production lead times. But how do you quantify the change in profits through better forecast?

One way is to compare the standard deviation of forecast with actual sales when it was taking a long time. Use marginal contribution to allocate products as capacity, shelf space is always limited compare the profit using this approach with allocating products with more accurate forecast.

Don't forget that if you can aggregate purchasing, you can lock raw materials/supplies to speed up lead time dramatically. That's what Li and Fung do.