The paper "Demand Business Forecasting" is a great example of management coursework. Business organizations operate in environments full of internal and external uncertainties which include failure of technology, inflation, fluctuations in the labour market, economic crunch, high competition and political instability. Hence business plans are formulated amidst all these. Organizations can overturn these uncertainties and risks by predicting the future demand or sales of its products and services otherwise what is commonly referred to as demand forecasting. Demand forecasting is thus an ordered process that entails predicting the demand for the products and services of an organization in future in the midst of uncontrollable factors (Nitisha 2013).
It is a process of finding values of demand for products and services in future time periods. According to Moon (2013), demand forecasting is the organization’ s best guess about the trend the customer demand will exhibit in the future time periods. Demand forecasting helps the organization to be better placed for future market conditions as information gathered from the process of forecasting will be able to provide answers to such questions as what will be the profit in the coming period?
what will the demand for given products and services look like in the future? among others (Hart, Rasner and Lukosvova 2012). This report will report on the importance of demand forecasting, its relevance to supply chain management at strategic, tactical and operations levels. It was also given findings on challenges and issues in demand forecasting as well as the benefits associated with demand forecasting to an organization. Importance of demand forecasting In most cases when firms face difficulties in their operations they tend to attribute those predicaments to poor or no forecasting at all.
This wouldn’ t be far from the truth. Demand forecasting is an integral part of any business organization. One of the reasons as to why demand forecasting is that through forecasts firms become aware of the probable demand. Firms are made aware of the number of products and services that will be required in the near future and thus gather the necessary resources required to make sure that such amounts are available in the future (Hussain 2010). When the demand forecasting is done accurately it helps the firm to produce only the required quantities of goods and services and enables the firm to also plan well in advance for the various factors of production.
In essence, it enables the firm to have in place a suitable production policy. Forecasting determines the amounts that should be produced, purchased and shipped (Caplice 2003). Demand forecasting is also a very important undertaking as it helps the firm to gauge its labor requirements in the future. It thus can as well forecast future recruitment. Through demand forecasting the firm is made aware of how many employees are needed in the future so it can embark on the selection and recruitment process of the laying off process (Hussain 2010).
Demand forecasting data are utilized by firms to estimate future capacity requirements and thus prepare well in advance for the same (McNamara 2013). Because the demand for commodities and services vary from month to month, the firm might be required to scale up or down the workforce through overtime, reassignment, layoffs or new recruitments.
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