It's easy to see that inaccurate forecasts can cause major problems for your company. When forecasted demand is far below actual demand for a product, you risk running out of products and disappointing your customers. If forecasted demand exceeds actual usage, you'll probably be faced with large quantities of dead stock and slow-moving inventory. For your company to be successful, your demand forecasts for products must be as accurate as possible.
Most software packages offer some demand forecasting tools.
Most do a fairly good job of predicting future usage. But some of them include attributes that prevent them from doing the best possible job of predicting future demand in every situation. These may be products that are made to order or are imported from overseas. When most packages recalculate purchasing parameters, they forecast demand for the upcoming month. For example, at the end of December, the system will forecast demand of products for January.