preview

Demand Forecasting : Supply Forecasting

Better Essays
Demand Forecasting
In order to predict and estimate values for purchasing activities of a certain product or service, demand forecasting is used. Demand forecasting uses
• Data from current activities within a company
• Historic data in order to access future capacity requirements
One vital method applied is exponential smoothing, which uses weights to the values observed. Due to its high-end spectrum of time convenience and its quick application, exponential smoothing creates a huge advantage of the reliability of forecasts for multitudes of industries. The most important utilization of this methodology is when the mean square error is the lowest value possible between the actual and the predicted data. Demand forecasting can be used in multitudes of businesses whether they are start-ups, medical facilities, or supermarkets; the importance of demand forecasting is vital in any company that sells a product or service to consumers. The importance of this technique improves
• Distribution of resources allocated over time
• Devising pricing and sales
• Managing inventory
Every industry needs demand forecasting to simply be successful, especially since demand is such a huge and vital factor in market segments. In the graph below, the use of exponential smoothing using current data is predicted by using different weights that can be related with past observations. First, from the data observed, it is possible to do several estimations using the exponential smoothing method
Get Access