Demand forecast is an important part in marketing and supply chain management. How good a product sell depends on how well the forecast predicted the product market including all the variabilities in between. However, it is also really easy to screw up a demand forecast. Variances such as government policy, sudden shift in consumers’ preferences, future competitions and such will result in consequences for screw up forecast.
Why would a forecast still be important when it’s only an estimation and often likely to be a wrong one? A forecast uses the current condition in the market to generate the most likely product management in this situation. It can’t control every elements in a market, but it shows a general aspects of a market. It helps analyze the opportunity cost behind each decision and helps to chose the best one for the company. Therefore, the forecast provides an opportunity distribution which helps the company to make a final decision.