Question

How exactly is forecasting utilized in business operations? (Hint: use the example of warehousing distribution)

Answer 1

Forecasting can be of three types:-

1. Demand forecasting- current and projected demand by customers and industry

2. Supply forecasting- collection of data about current producers and suppliers and technological and political trends that might affect supply

3. Price forecast- based on information about demand and supply

Forecasting is very important part of supply chain management. Demand forecasting helps you to time your purchases to correspond to when supply demand or sales need to be fulfilled. The less time inventor spend in warehouse, the less money company are paying to let it just sit there waiting to be sold. Forecasting helps warehouses to keep track of sales and anticipated demand, so they can ensure that the available stock is correct or adequate to meet customer needs or not. Reducing forecasting error is essential if a businesses who want to gain competitive advantage. Proper forecasting reduced business operations cost and make it effective and efficient for a long term.