What Is The Importance Of Demand Forecasting?
Sales constitute the primary source of revenue for the business firm. Thus sales forecasts are needed for production planning, inventory planning, profit planning etc. Production requires support of men, material, machines, money which will have to be arranged. Thus man power planning, replacement; new investment planning, working capital management and financial planning etc depend on sales forecasts. Thus demand forecasting is crucial for corporate planning. The survival and growth of business firm has to be planned, and for this sales forecasting is the most crucial activity. The purpose of forecasting in general is not to provide an exact future data with perfect precision. The purpose is just to bring out the range of possibilities concerning the future under a given set of assumptions.
