Definition and Types of Demand ForecastingAuthor : Mohammad Ali , Founder and CEO of Inventory Software Services
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Demand forecasting is the measurement of future customer demands using historical data. Demand forecasting gives you valuable data for your business's future direction. A proper demand forecasting can tell the potential your business in the marketing, your business growth strategy. For that it's easy to make future business plan for an inventory manager.
Without demand forecasting , business decision makers can not take proper decisions about their products and markets.
Reasons why demand forecasting is important for businesses:
1.It's easy to properly optimized an inventory.It's help to increase turnover rates and reduce holding cost.
2.It's gives you future business map. So business decision makers can drive their business in right way.
3.By using proper demand forecasting you can properly use your business resources.
Types of demand forecasting
Mainly there are three types demand forecasting.Here we discuss about those:
Qualitative demand forecasting :
Qualitative forecasting is used when no much historical data is available about the products.Specially for new products.Forecasting is measured using related products historical data, expert opinions and market analysis. Qualitative forecasting is mostly used for new versions of technology products.
Time series analysis of demand forecasting :
Time series forecasting is used when a products have available historical data. In this forecasting using seasonal demand trends for a products. It's so much important for a business which have seasonal products.
Causal models of demand forecasting :
Causal models of demand forecasting is a complex forecasting for a business which depends on so many factors. It's uses historical data,competitors, economic forces, and other socioeconomic factors though historical data is the main key to creating a causal forecasting.