Question

How is forecasting used in supply chain management provide a specific example of a supply chain management activity and the type of forecasting methods models that should be

how is forecasting used in supply chain management provide a specific example of a supply chain management activity and the type of forecasting methods models that should be applied

Answer 1

Forecasting helps to ensure that there is enough supply to meet demand at all times. If the demand is overestimated the company would be bloated with inventories and if the demand is underestimated then some customers may go emptyhanded.supply chain management is the process of meeting supply with demand. So forecasting in supply chain management is all about helping the company to fill order timely, cutting unnecessary expenses, thus reducing cost and keeping customers happy. For example the issue is of pricing and promotion of new products where retailers may have this information and may set pricing or promotion without telling to the distributor. In this case collaborative forecasting would address the issue. It uses historical data to predict sales in future and focus a shift from independent, forecasted demand to dependent, known demand. It applies statistics to past data and come up with a single statement of demand. It helps in collecting geographic information which is further helpful in pricing and promotion