Demand in simple words can be defined as the want of something plus the ability to pay, that is, purchasing power of the customer. The law of demand which is extensively used in microeconomics states that price and demand are inversely proportional to each other.
Forecasting is used in various circumstances to get more insights about data. It is one of the important tool used for predicting future demand based on demand information.
Forecasting is used for:
- Strategic Planning (long range planning)
- Finance and Accounting (Budget and Control Costs)
- Marketing (Future sales, new product launches, campaigns designs)
- Operation (Supply chain Management)
Demand Forecasting is the process in which historical sales data is used to develop an estimate of an expected forecast of customer demand. To businesses, Demand Forecasting provides an estimate of the amount of goods and services that its customers will purchase in the foreseeable future. There are various factors that are involved in demand forecasting such as data required, time period, purpose, nature of commodity, nature of competition etc.