Naga,
In simple words, its the strategy which you're going to use for the forecasting.
Strategy comprises of.
1. Your knowledge on product line and understanding on how the history of sales Behavior for the product groups of your Business.
2. Choosing the appropriate Forecast Model for your forecasting.
3. Whether you're going to use to Statistical forecasting (Univariate - Means relying on statistics data of your sales histories, these statistics will be the input for the forecast model's formula whichever you've chosen) OR Composite forecasting (Combination of multiple Univariate forecast models) OR Automatic Model (Asking system to choose on based on your data).
4. Initialization and smoothing factors ( Alpha, Beta, Gamma parameters which will correct your forecast results to some extend as per your wish)
5. Forecast Error & Outlier Correction - Error is what the difference between your History and Forecast of the month. If the error is huge enough then they should be corrected using your Outlier settings.
6. Which Error Type should be used for calculating the errors (Std Deviation)
7. No of Historical period and forecast periods.
Above all will influence the accuracy of the forecast based upon the past sales behavior of the product.
Just my Thoughts
Regards
Vinoth