What is the significance of demand forecasting in business decisions?


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Connor Sephton answered
Demand forecasting is very significant in business decisions, because it will affect how much of a product is manufactured, distributed, and marketed. Business people use past sales figures, trends and currents in the marketplace to establish exactly how much future demand there will be for a product in stores, or in online retail outlets.

  • Forecasting can be flawed

Sometimes, this type of forecasting can be flawed; at other times, it hits the target beautifully. Because results may vary, business analysts spend a lot of time figuring out how to get the best possible demand forecasting for their businesses. Sometimes, consultants will be brought in to review the company's books and decide exactly how much potential a company has. At other times (when hiring a consultant isn't feasible) company executives may work with accountants or colleagues to "crunch the numbers" and decide how the company is doing.

  • Investment is linked with forecasting

To interest investors in a company, demand forecasting must be honest and accurate. Often, company principals who want to lure new partners or investors will put together a company prospectus which offers financial details about a company, including demand forecasting figures. These documents or reports are usually confidential, and the people who read them may need to sign a non-disclosure agreement before they can look at them. This secrecy happens because a company's financial picture is private, unless they are publicly traded firm with shareholders and a board of directors.

To learn more about demand forecasting in business, take the time to study some business manuals and read some business articles. Hot websites for finding out more about business include or even, which both offer current news and editorial pieces devoted to business and business forecasting. The Internet also features a wealth of blogs devoted to business matters.

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