Overestimating Is Not Better Than Underestimating


In a recent interview about the COVID-9 pandemic, mayor of New York City Bill DiBlasio reveled that he had overestimated the number of respirators they needed. He had estimated they needed between 200 and 300 each day. The real number was under a hundred. When criticized people took a quote from Dr. Fauci who said that he would rather be criticized for overestimating than underestimating. The fact of the matter is neither one is good.

Using this example, let’s look at it from the perspective of the mayors of Philadelphia, Houston and Chicago. If New York gets 100 – 200 more ventilators per day than they need, they have to come from a limited stock. How many people in those other cities couldn’t be put on ventilators because New York was sitting on a stockpile?

While your business may not be dealing with life and death issues, the lesson is worth learning. You need to have enough resources to serve your customers. If you overestimate the number of customers, you’ll be tying up valuable resources in inventory. If you underestimate, you’ll face shortages and be unable to fill your customers’ needs. What happens if you overestimate the number of potential customers? You could find yourself out of business.

While it is not realistic to hit the number exactly every time, the point is that underestimating and overestimating cause equal difficulties. Neither one is better than the other. Just do your best to get as close as possible.

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