Demand forecasting is the process of finding out the likely demand for a firm’s product at various prices during a specified future period of time. From the planning requirements, a business firm needs demand forecast for different time spans. Accordingly, there are two main types of demand forecasts: the short-term and the long-term.
Short-term demand forecasting is defined as the process of finding out the likely demand for a firm’s product at various prices during a short period of time, say, not exceeding a year. It relates to policies regarding sales, purchase, price and finances.
This is required for current production scheduling, purchases of raw materials and inventory of stocks, etc. Short term forecasting is essential for formatting a suitable price policy.
The seasonality of sales and its impact on production planning, stocks, distribution of products in markets etc, will be taken care of by the short-term demand forecasting. If the business people expect a rise in the prices of raw materials or shortages, they may buy early.
Short-term demand forecasting
