Demand forecasting

How it is used

The starting point for purchasing, production and inventory planning. Planners talk about forecast accuracy, forecast error, seasonality and statistical models. The result is 'a forecast': you build, update, revise or miss a forecast.

Example sentences

1. Better demand forecasting helped us cut excess stock by 20 percent.

2. Our demand forecasting model doesn't reflect the summer peak well, so we often run short in July.

Common collocations

• demand forecasting model
• improve demand forecasting
• forecast accuracy
• sales forecast

Related terms

• demand planningThe process of predicting future demand and agreeing on one demand plan that the company then uses to plan purchasing, production and stock.
• safety stockExtra stock kept on top of expected demand to protect against sudden increases in demand or late deliveries from suppliers.
• S&OPShort for sales and operations planning: a regular, usually monthly, process in which sales, operations, supply chain and finance agree one plan that balances demand and supply.
• bullwhip effectThe way small changes in consumer demand turn into larger and larger swings in orders and stock as they move up the supply chain to wholesalers, manufacturers and suppliers.
• MRPShort for material requirements planning: a system that uses the production plan, bills of materials and stock levels to calculate which materials to order or make, and when.

More terms: Demand Planning

• just-in-time